KUALA LUMPUR (May 31): Telekom Malaysia Bhd (TM) shares rose 2.31% in active trade at mid-morning today after the group reported that its net profit for the first quarter ended March 31, 2019 (1QFY19) doubled y-o-y to RM308.28 million, from RM157.16 million, due to a decline in operating cost.

At 11.16am, TM rose 8 sen to RM3.54 with 23.43 million shares traded.

Quarterly revenue dropped 2.4% to RM2.78 billion from RM2.85 billion in 1QFY18. Earnings per share rose to 8.2 sen from 4.18 sen previously.

Meanwhile, CIMB IB Research has maintained its "hold" rating on TM at RM3.46 with a higher target price of RM3.46 (from RM3) and said Telekom's 1QFY19 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 with expectations. Unifi average revenue per user (ARPU) and total broadband subscribers 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 TM's core EPS to rise 41.8% y-o-y in FY19.

"Sequentially, core EPS may decline in 2Q-4QFY19 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 (discounted cash flow)-based target price of RM3.40," it said.