• Maintain BUY (TP: RM7.06). TM's FY23 revenue remained relatively flat, showing a slight increase of +1.1% YoY, which aligned closely with our anticipated figure of 98.6%. However, TM's FY23 net profit surged to RM1,871mn, marking a significant YoY increase of +63.7%, above our expectations and consensus estimates by 121% and 110% respectively. This variance from our projection was primarily attributed to lower-thananticipated taxes in the current quarter. In 4QFY23, the group's revenue increased by +5.1% YoY, while net profit saw a rise of over 100% YoY, driven by the recognition of tax credits resulting from the utilisation of previously unacknowledged tax losses. Maintain a BUY call with a higher TP of RM7.06 (from RM7.00). Our valuation is derived based on DCF valuation with a WACC of 7.4% and a long-term growth of 1.0%.

• Key highlights. Segment-wise, Unifi business recorded higher revenue contribution by +0.3% YoY primarily attributed to the Internet sector, aligning with the sustained growth in cumulative fixed broadband subscribers. It is worth to note that the fixed broadband segment of Unifi experienced a growth of 3.1%, reaching 3.13mn subscribers, propelled by strategic convergence campaigns and vigorous customer retention initiatives. TM Global, recorded a higher revenue by 8.7% YoY to RM3,098.5mn supported by higher data and other telecommunication services.

• Earnings Revision. We've adjusted our forecasts for FY24-FY26F higher by 8.2%, 1.3%, and 1.3% respectively to accommodate changes in the tax provision. This adjustment comes in response to information from TM suggesting that the tax provision is expected to remain low over the next few quarters.

• Outlook. Despite the relatively stable Unifi ARPU in the current quarter, we anticipate TM to sustain resilient earnings in FY24, bolstered by the expectation of a low tax provision. Additionally, the management's outlined FY24’s KPIs consist of: (i) achieving low-single-digit revenue growth, (ii) attaining EBIT within the range of RM2.1bn-RM2.2bn, and (iii) maintaining a capex/revenue ratio of 14%-18%.

Source: BIMB Securities Research - 26 Feb 2024