KUALA LUMPUR (June 25): Telekom Malaysia Bhd's (TM) share price rally is gaining momentum, evidenced by the strong rally in its share price, which hit a 52-week high of RM4.22.

At 4.20pm, the telco is trading at RM4.21, up 16 sen or 3.95%, with 16.4 million shares changing hands.

After the share price meltdown last year, TM has nearly doubled from its record low of RM2.14.

Its latest quarterly financial results that show better earnings and cost efficiency helped to woo back investors to the telco, which was once bashed down by the mandatory standard on access pricing (MSAP), which will result in lower fixed broadband prices.

For the first quarter ended March 31, 2019 (1QFY19), TM's net profit almost doubled to RM308.28 million, from RM157.16 million a year ago. This was despite revenue falling 2.4% year-on-year to RM2.78 billion in 1QFY19, from RM2.85 billion. The 1QFY19 core earnings per share was above expectations, forming 45% of Bloomberg consensus forecast for the financial year ending Dec 31, 2019 (FY19).

TM's improved financial performance in 1QFY19 coincided with the group's adoption of the Malaysia Financial Reporting Standard 16 (MFRS 16). This change of accounting treatment has helped the group recognise RM23.9 million more profit after tax and minority interest (Patmi) for the quarter.

TM's presentation slides to analysts disclosed that 1QFY19 Patmi post-MFRS 16 was RM308.3 million or 8.4% higher than the RM284.4 million Patmi under pre-MFRS 16's accounting treatment.

While analysts concur that there is a positive effect from MFRS 16, they opined that the major driver of the improved financial performance in the quarter was still the group's rationalisation effort.