Date of Report
September 17, 2024

Broker Name
CGS International

Company Overview
Telekom Malaysia (TM) is a leading telecommunications provider in Malaysia, with core business areas including broadband, data, and other related services. Despite facing increased competition in the retail broadband segment, TM continues to show growth in its overall data revenue.

Financial Performance

• FY24-FY26 Forecast: CGS International has raised its core net profit estimates for FY24F, FY25F, and FY26F by 3.3%, 1.1%, and 1.7%, respectively, following TM’s 2Q24 results.
• Consensus Beating Performance: The new profit estimates leave TM at 104%, 115%, and 122% of Bloomberg consensus estimates for FY24F, FY25F, and FY26F.
• Data Revenue Growth: TM’s overall data revenues are expected to expand at a 4% Compound Annual Growth Rate (CAGR) between FY23 and FY26F.

Valuation Metrics

• Price-to-Earnings (P/E): TM is trading at a 13.3x FY25F core P/E ratio.
• Return on Equity (ROE): TM’s projected ROE for FY25F stands at 18.3%.
• Dividend Yield: TM offers an attractive dividend yield of 3.9% for FY24F.

Competitive Landscape
While TM faces heightened competition in the retail broadband space, its strong position in the market and expected revenue growth make its valuations attractive compared to both regional and domestic peers.

Analysts’ Outlook
CGS International maintains its “Add” rating on Telekom Malaysia, with an upgraded target price of RM8.60, reflecting confidence in the company’s ability to navigate the competitive landscape and continue its growth trajectory.

Analysts Contact Information

• Lee Ching Poh

  • Phone: (60) 3 2635 9262
  • Email: [email protected]

• Kong Seh Siang

  • Phone: (60) 3 2635 9261
  • Email: [email protected]

This information has been extracted solely from the report issued on September 17, 2024, by CGS International.