• Maintain BUY (TP: RM6.09). TIME’s 1HFY24 revenue grew by 10.4% YoY to RM836mn supported by higher contribution from Retail (+13.0% YoY) and Wholesale business (+10.0% YoY). Nonetheless, the group’s net profit was down by -91.1% YoY to RM212mn due to recognition of one-off gain from divestment of AIMS recorded in 1HFY23 amounted to RM2.26bn. Excluding non-recurring items, TIME’s core net profit grew by 12.1% YoY to RM215mn which is in-line with ours and consensus expectations, accounting for 45% and 46% respectively. Maintain a BUY call on TIME with an unchanged TP of RM6.09 (WACC: 6.4%; g: 1.0%).

• Key highlights. On a quarterly basis, TIME's revenue grew by +7.5% YoY mainly supported by data segment which grew by +12.0% YoY. At PBT level, the group achieved a significant growth of +>100% YoY due to (i) lower personnel cost of RM54mn in 2QFY24, (ii) lower provision for impairment of submarine cable asset (2QFY24: RM Nil, 2QFY23 RM28mn), (iii) lower provision for construction deposit (2QFY24: RM Nil, 2QFY23: RM16mn), (iv) lower inventory written off of RM1mn, and (v) higher overall revenue in the current quarter. Core earnings increased by 17.1% YoY, attributed to revenue growth and lower operating expenditures which partially offset by lower share of results from investment.

• Earnings Revision. No change to our forecast.

• Outlook. Overall, we anticipate continued strong contributions from data and data centres, which are the group's primary earnings drivers, driven by the growing demand for data. It is worth to note that one of TIME’s key priorities is to remain committed to expanding coverage and investing in its network. We opine that the increasing digitalization across various industries is further fuelling the need for data. Additionally, we believe the rising adoption of AI is creating new opportunities for data centre service providers and driving a shift in data centre strategies to accommodate AI workload requirements.

Source: BIMB Securities Research - 27 Aug 2024