TM gets positive calls from analysts on firm FY20 results

TM gets positive calls from analysts on firm FY20 results
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KUALA LUMPUR (Feb 25): Analysts have maintained positive calls on Telekom Malaysia Bhd (TM) after the integrated telecommunications company registered firm results for the financial year ended Dec 31, 2020 (FY20).

TM, in a filing with Bursa Malaysia on Wednesday, said its net profit for FY20 rose to RM1.02 billion compared with RM632.68 million in FY19.

Its fourth quarter of FY20 (4QFY20) net profit stood at RM259.4 million against a net loss of RM51.1 million in the previous corresponding quarter, boosted by lower operating costs and other gains.

Kenanga Research, in a note on Thursday, upgraded the company to “outperform” from “market perform” call with an unchanged discounted cash flow-target price (DCF-TP) of RM6.85.

“We view the recent share price correction as an opportune time to accumulate, as TM’s continued strive for profitability, coupled with its exposure to fibre broadband, 5G, cloud services, and data centres, provides growth opportunities,” said its analyst, Clement Chua.

Meanwhile, RHB Research has reiterated a “buy” call on TM with a higher DCF-derived TP of RM7.30 from RM7.20.

Its analyst Jeffrey Tan expects the stronger growth in internet and data or wholesale revenue to continue, driven by higher fiber take-up and targets under the National Digital Infrastructure Plan (JENDELA), strong cost vigilance, and productivity gains. 

“TM is a key beneficiary of the MyDigital blueprint with increased fibre backhaul demand, coupled with its de-facto domestic cloud services provider status,” he said.

Maybank Investment Bank Bhd also reiterated a “buy” call on TM with a higher TP of RM7.40 from RM5.50 previously.

“With TM being a beneficiary of both the work-from-home and 5G-deployment themes, we see room for valuation to expand,” said its analyst Tan Chi Wei.

At 10.02am, TM’s shares added one sen to RM6.24 with 1.13 million shares traded.