TM (HOLD)

• Although both revenue and EBITDA came in within expectations, FY11reported core net profit of RM1,002.7m exceeded expectations, accounting for153% of our full-year forecast and 170% of consensus chiefly due to therecognition of deferred tax income on unutilized tax incentives.
• Declared a final single-tier dividend of 9.8 sen per share lifting thetotal dividend for FY11 to 19.6 sen per share.
• TM also proposed capital repayment of 30 sen per share via capitalreduction.
• We reiterate our HOLD call although our DDM-derived TP has been upgradedby 13.7% to RM5.16 from RM4.54 factoring in the 30 sen per share capitalrepayment. The stock is likely to continue attract investors due to itsdefensive nature amidst strong swings in global equity market.