• Maintain BUY (TP: RM6.09). TIME’s 9MFY24 revenue rose by 7.8% YoY to RM1,260mn, driven by strong growth in Retail (+12% YoY), Wholesale (+6% YoY) and Enterprise segments (+5% YoY). However, net profit declined by 89.1% YoY to RM271mn due to a one-off gain from the AIMS divestment recognized in 9MFY23. Core net profit increased by 10.6% YoY to RM329mn, supported by overall revenue growth and higher income contributions from JV/associate companies, partly due to gain from recognition of one-off deferred tax assets. Earnings are in line with expectations, accounting for 70% of our estimate and 72% of consensus projections. 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 3.0% YoY, primarily driven by a 6.0% YoY increase in the data segment. However, PBT dropped significantly by 43.2% YoY, impacted by (i) increased net foreign exchange losses of RM68.9mn (2Q24 forex loss: RM6.6mn), (ii) higher personnel costs of RM4.4mn, (iii) a higher allowance for doubtful debts amounting to RM1.8mn, and (iv) RM1.1mn in inventory write-offs. Despite this, core earnings rose by 6.6% YoY, mainly supported by overall revenue growth and a higher share of results from JV/associate companies, partially aided by gain from recognition of one-off deferred tax assets.

• Earnings Revision. No change to our forecast.

• Outlook. The group remains focused on expanding its fibre coverage both nationally and internationally, with an emphasis on high-density areas and the ASEAN region. Despite heightened competition, ARPU has remained stable. It is worth to note that subscriber growth continues to be supported by the expansion of its fibre footprint, which has increased by 3% to 1.73mn fibre premises as compared to 1.68mn in the previous quarter. We anticipate better contributions from TIME's data and data centre segments, fuelled by rising data demand and accelerating digitalization across industries.

Source: BIMB Securities Research - 28 Nov 2024