RHB downgrades Time dotCom to ‘neutral’ from ‘buy’

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KUALA LUMPUR (Aug 25): RHB Research Institute Sdn Bhd has downgraded Time dotCom Bhd shares to “neutral” from “buy” with an unchanged fair value (FV) of RM5.20. The downgrade followed the recent rise in shares of the telecommunication entity.

The rise in Time’s share price came after the group announced its participation in a consortium of international telecommunication companies for the construction of the US$300 million
(RM951 million) undersea FASTER cable system.

“We keep our RM5.20 FV, but downgrade the stock to "neutral" (from "buy") as we believe most of the recent positive news has been priced in,” said RHB in a note today.

The note followed the announcement of Time's latest financials.
Last Friday,, Time reported an 88.9% fall in net profit to RM44 million for its second quarter ended June 30, 2014 (2QFY14) from RM390.4 million a year earlier. The fall was attributed to the RM349.4 million fair value (FV) gain a year earlier from the realisation of its available-for-sale reserves in 2QFY13.

In 2QFY14, Time said the absence of the FV gain also caused the group’s net profit in the cumulative six months to fall 82.8% to RM73.4 million from RM426.4 million a year earlier.

Today, RHB said Time’s 1HFY14 core profit before tax (PBT) of RM59m was in line with forecasts. RHB said Time's core PBT would have risen 9.6% if its node-fiberisation contract wins in 1HFY13 were excluded.