TM shares rally after strong FY23 performance

KUALA LUMPUR: Telekom Malaysia Bhd’s (TM) shares were up in early trade after the company recorded a strong net profit of RM1.87 billion for the financial year ended Dec 31, 2023 (FY2023) from RM1.14 billion achieved in FY2022, amid lower net finance cost and tax impact.

At 10.42 am, TM’s shares jumped 13 sen or 2.20 per cent to RM6.04 with 2.73 million shares traded.

In a filing with Bursa Malaysia on Friday, it said the group’s revenue rose to RM12.26 billion in FY2023 from RM12.12 billion previously propelled by the strong performance of Unifi and TM Global.

In the fourth quarter of FY2023 (4Q FY2023), TM’s net profit surged by 170.6 per cent to RM433.53 million against RM160.18 million recorded in the same quarter of FY2022, while revenue improved by 5.1 per cent to RM3.13 billion compared to RM2.98 billion previously.

The better performance was mainly due to the increase in data, Internet and multimedia services, as well as other telecommunication services.

Today, Hong Leong Investment Bank Bhd (HLIB) has reiterated a ‘buy’ call on the back of a higher target price (TP) of RM7.20 per share.

“We are particularly positive on its cost optimisation measures which are now yielding an impactful outcome.

“Leveraging on its extensive fibre reach, TM is perceived to be the critical fundamental building block of the government’s 5G rollout under the MyDigital initiative.

“Furthermore, TM is well positioned as the sole Malaysian Cloud service provider when sovereignty is important in dealing with government data,” it said.

Meanwhile, Maybank Investment Bank Bhd said TM’s 4Q FY2023 core net profit was above its consensus expectation due to positive taxes.

“Management is guiding for stable earnings before interest and tax and a non-recurrence of tax credits (from utilised tax losses) in FY2024.

“Despite the tepid guidance, we note that TM’s strong free cash flow generation leaves ample headroom for increased dividends over the longer term. Hence, we reiterate a ‘buy’ call with a higher TP of RM6.80 per share,” it said.

Maybank Investment Bank said it lowered the group FY2024/2025 net profit forecasts by 3 per cent/2 per cent respectively on housekeeping and introduced FY2026 forecasts.

Kenanga Investment Bank Bhd has raised FY2024 net profit by 10 per cent to reflect stable Unifi average revenue per user.

The research house also maintained an ‘outperform’ call and lifted the group TP by 7 per cent to RM7.22 per share. – BK