Secures a 12-year Concession Worth RM1.3bn

TM’s wholly-owned subsidiary, TM Technology Services Sdn Bhd, has entered into a concession agreement with the government to implement the Next Generation Emergency Services 999 (NG999) as a continuation of Malaysia Emergency Response Services 999 (MERS 999).

NG999 is a strategic digital platform for the public to access emergency services offered by five key emergency agencies nationwide, which include i) the Police, ii) the Health Ministry, iii) the Fire Department, iv) the Maritime Enforcement Agency, and v) the Malaysian Civil Defence Force.

The concession will commence this year, with an effective date to be determined later, and last for 12 years until 2036. The concession agreement is valued at RM1.3bn or RM104.2mn per year.

The services to be offered to the government under the NG999 agreement comprise call management, infrastructure & platform, connectivity, and support services.

Our View

While securing this project is a positive development, we believe the earnings impact is minimal, as the annual revenue contribution is projected to be only 0.9% of our total revenue forecast for FY25. Overall, we believe TM will be able to run the concession effectively, given that it has a proven track record and vast experience in MERS 999.

Impact

Maintain FY24 to FY26 Earnings Forecasts.

Valuation & Recommendation

No change to our target price of RM7.70, based on DCF valuation with a WACC of 8.5% and LT growth rate of 2.0%. Reiterate a Buy call on the stock.

Source: TA Research - 2 Jul 2024