TIME's 3MFY24 revenue grew by 13.4% YoY to RM417.8mn, driven by higher contributions from Retail (+13.0% YoY), Enterprise (+15.0% YoY), and Wholesale business (+12.0% YoY). Excluding non-recurring items, core net profit rose by 7.1% YoY to RM108.9mn. On quarterly basis, core earnings increased by 7.3% QoQ, supported by stable operating margins and higher investment profits, though the company booked in higher submarine-related and start-up costs for new energy ventures.
With the establishment of a strategic partnership with DigitalBridge, AIMS is poised for accelerated expansion into underserved markets in the region, focusing on the highly connected, ecosystem-centric data center space. AIMS, along with CMC Telecom in Vietnam and Symphony in Thailand, contributed RM1mn up by >100% to the 1Q24 bottom line. It is worth to note that responding to robust customer demand, AIMS will commence the construction of AIMS Cyberjaya Block 3, slated for completion by 2Q25. Block 3 will incorporate similar advancements but with an increased IT load capacity of 12MW, aimed at supporting more AI workloads. Additionally, Block 3 will provide customers with the option of a liquid cooling system. Looking ahead, we expect significant contributions from data and data center operations driven by growing demand for data. We favor TIME due to the group’s positive momentum from ongoing expansion efforts. Increasing digitalization across various industries further boosts the need for data, while the rising adoption of AI creates opportunities for data center service providers, prompting a shift in data center strategy to meet AI workload requirements.
Maintain a BUY call with DCF-derived TP of RM6.09 (WACC: 6.4%; g: 1.0%) – refer table 1.
Downside risks to our call include: (i) strong competition from other service providers in terms of network coverage and the range of services provided, which could impact TDC’s business cluster, and (ii) weakerthan-expected margins.
Source: BIMB Securities Research - 17 Jul 2024
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Created by kltrader | Jul 17, 2024
Created by kltrader | Jul 17, 2024