UOB Kay Hian Private Limited
Date of Report: Thursday, 28 August 2025
TIME dotCom Bhd: Robust Retail Growth and Sustainable Profits Power Bullish Outlook

Overview: TIME dotCom Bhd Delivers Strong 2Q25 Performance

TIME dotCom Bhd (“TIME”) continues to impress investors with a solid second quarter 2025 performance, reinforcing its status as a leading fixed-line operator in Malaysia. The group posted robust earnings, highlighted by positive retail and enterprise revenue trajectories, healthy contributions from associates, and ongoing cost optimization initiatives. With a maintained “BUY” recommendation and a target price of RM6.00, TIME presents compelling capital appreciation potential and attractive dividend yields.

Financial Performance: 2Q25 Results In-Depth

TIME’s 2Q25 core net profit rose 8% year-on-year to RM113.4 million, a slight 4% decline quarter-on-quarter attributed to lower interest income after a substantial dividend payout in 1Q25. Both retail and enterprise segments delivered impressive growth, supported by stable ARPU and expanding customer base.

Segment Analysis: Retail, Enterprise, and Cloud Solutions

Retail Segment

• Retail revenue surged to RM177.6m (+11% yoy; -3% qoq), driven by increased household penetration across both multi-dwelling units (MDUs) and single-dwelling units (SDUs).
• ARPU remained robust at RM117/month, supported by targeted plan rebates and marketing initiatives.
• Customer base expanded by 9,000 in 2Q25, reaching 497,000 subscribers.

Enterprise and Cloud Solutions

• Cloud and enterprise revenue grew 6% yoy and 20% qoq to RM45.5m, mainly due to stronger project execution in system integration (SI) solutions.
• 1H25 revenue declined by 9% yoy, largely due to revised terms and rates for VMWare offerings.
• Revenue from SI projects is expected to remain challenging, with contract renewals and customer migration to new subscription models anticipated in 2H25.

Voice and Data Revenue Breakdown

Associates and Data Centres: AIMS Contribution and Outlook

• Share of profit from associates increased 4% yoy, holding steady qoq at RM9.6m (9% of group core net profit).
• AIMS, the data centre arm, delivered strong growth thanks to ongoing capacity expansion in Cyberjaya, along with one-off charges from new customers.
• Outlook for AIMS earnings in 2H25 is expected to moderate as interest and depreciation charges increase.
• Thai associates, CMC and Symphony, continue to face pressure due to ongoing border conflicts with Cambodia.

Dividend Policy Changes and Capital Expenditure Revision

• No interim dividend declared for 1H25, versus 18.93 sen/share in 1H24.
• 2025-26 net DPS revised down to 27 sen/share and 30 sen/share, assuming 100% payout (previously 125%).
• Stock offers net dividend yields of 5.2% and 5.7% for 2025F and 2026F, respectively.
• Capex target for 2025 now RM350m-400m, reduced from RM400m-450m due to delays in non-consumer expansion.
• Year-to-date capex reached RM179m, focused on expanding fibre networks for both MDUs and SDUs.

Operational Highlights: Network Reach and Subscriber Growth

• TIME’s network now covers 1.9 million home passes, with growth evenly split between MDUs and SDUs.
• Management expects robust subscriber growth in 3Q25, supported by the onboarding of 500,000 new subscribers in July 2025.
• SDU subscriptions are projected to outpace MDUs, especially in greenfield areas due to strong demand.

ESG Initiatives: Environmental, Social, and Governance Commitment

• Converted rural off-grid sites to commercial grid power and adopted new energy vehicles to reduce GHG emissions.
• Solar energy initiatives at headquarters yielded 42,455.85 kWh, cutting FY24 CO₂ emissions by 480 tonnes.
• Invested over RM4.5m in community projects and logged more than 4,800 employee volunteer hours.
• Maintains high transparency and strict anti-bribery and anti-corruption policies.
• Diverse board: 44% women representation, with six independent and three non-independent directors including the GCEO.

Valuation, Earnings Outlook, and Key Financials

• DCF-based target price of RM6.00 (WACC: 7%, terminal growth: 4%).
• At target price, trades at 14.2x 2025 EV/EBITDA, representing +2 standard deviations above historical mean.
• Strong net margin and ROE growth forecasted through 2027.
• No change to earnings forecast; consensus and UOBKH estimates remain aligned.

Key Assumptions for 2025-2027

• Revenue growth: 4.1% (2025F), 5.2% (2026F), 5.3% (2027F)
• EBITDA margin: 41.1% (2025F), 42.6% (2026F), 43.0% (2027F)
• Capex to revenue ratio: 20.0% annually
• Product growth: Voice (-10% annually), Internet (+4.4% to +5.7% annually), Data centre (+5% annually)

Conclusion: TIME dotCom Bhd Remains a Standout Investment

TIME dotCom Bhd’s strategic focus on cost optimization, market expansion, and sustainable practices has translated into sustained earnings growth and shareholder value. The company’s robust retail momentum, disciplined capital management, and forward-thinking ESG initiatives position it as a top pick in the Malaysian communications sector. With a strong balance sheet, attractive dividend yields, and a clear growth runway, TIME dotCom Bhd is well placed to deliver superior returns for investors in the years ahead.