KUALA LUMPUR (Aug 30): Shares of Telekom Malaysia Bhd (TM) rose as much as 1.81% during the morning trade after announcing an improved net profit and revenue for the first half of the year ended June 30, 2021 (1HFY21).
At 12.28pm, TM stood at RM6.15 per share, up nine sen or 1.49%, after 2.3 million shares changed hands. This puts the company at a market capitalisation of RM23.21 billion.
Year to date, the counter saw a growth of about 13.3%.
Last Friday (Aug 27), TM announced a 27.3% increase in net profit at RM544.06 million for 1HFY21, compared to RM427.27 million in the same period last year, as revenue improved to RM5.57 billion from RM5.15 billion.
However, its second quarter (2QFY21) net profit fell 20.44% to RM218.59 million from RM274.75 million a year earlier, citing an increase in operating costs which included provisions recognised as part of the group's manpower optimisation initiatives.
TM said 2QFY21 revenue, however, rose to RM2.76 billion from RM2.59 billion, helped by the "increase in revenue for all services apart from non-telecommunication related services".
For 2QFY21, TM also declared a dividend of seven sen a share.
In a report today, CSG-CIMB Research retained its forecasts given the in-line set of results, and see FY21F/22F/23F core earnings per share (EPS) rising 17.9%/17.8%/18.7% year-on-year (y-o-y) on revenue recovery, with cost controls buffering any pressure from its fibre rollout acceleration.
It raised TM’s target price to RM7.50 from RM7, after rolling forward the discounted cash flow (DCF) base year to FY22F.
“EBITDA margin contracted 2.9 [percentage points] quarter-on-quarter (stable y-o-y) to 37.2% in 2Q21. This was led by higher other (normalisation after low levels in 1Q21) and direct opex (higher installation and customer acquisition costs due to strong Unifi subs growth), plus manpower optimisation cost (circa RM80 million).
"TM attributed the latter to its voluntary separation scheme (VSS) carried out during the quarter, which has a payback period of slightly over a year and will lead to permanent cost savings going forward," CGS-CIMB noted in a report today.
“It plans to continue undertaking VSS in future years, under its New TM transformation programme,” it added.
The research house noted that key re-rating catalyst for TM is stronger FY21-22F earnings while downside risks are higher-than-expected opex and adverse regulatory developments.