KUALA LUMPUR (May 31): CIMB IB Research has maintained its “Hold” rating on Telekom Malaysia Bhd at RM3.46 with a higher target price of RM3.46 (from RM3) and said Telekom’s 1Q19 core EPS (+162.4% y-o-y) beat expectations, largely on lower costs.

In a note May 30, the research house said revenue was in-line. Unifi ARPU & total broadband subs are still declining.

CIMB Research raised its FY19/20/21F core EPS by 56%/59%/44% to factor in lower domestic roaming fees, customer project costs and depreciation.

It said post-revision, it expects Telekom’s core EPS to rise 41.8% y-o-y in FY19.

“Sequentially, core EPS may decline in 2Q-4Q19 as costs pick up (rising 4G roaming traffic, customer project costs, higher capex spend).

“Thereafter, we expect core EPS to rise by a more modest 3.7% in FY20F, then ease 7.6% in FY21F, as revenue stays under pressure.

“Maintain Hold with a 13% higher DCF-based target price of RM3.40,” it said.