TM (4863) : Public Invest Research maintains Underperform on Telekom Malaysia
KUALA LUMPUR: Public Investment Bank Research is maintaining its Underperform recommendation for Telekom Malaysia with an unchanged target price of RM6.26 based on discounted cashflow valuation.
It said on Wednesday TM had secured a submarine cable project, which StarBiz estimated was worth RM720mil, was positive for the company.
“It was within our expectations and we maintain our call mainly due to stretched valuation. TM is trading at forward (FY15) price-to-earnings (P/E) of 27.7 times and EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) of 8.0 times which is at the top end of its historical trading range.
“TM’s earnings may face headwinds from consolidating P1’s losses from 4QFY14,” it said in a research note.
Under the contract awarded by Malaysian Communications and Multimedia Commission (MCMC), TM will build a submarine cable system called Sistem Kabel Rakyat 1Malaysia (SKR1M).
The SKR1M will span approximately 3,500km with an initial capacity of 4 Tbps and enhance the submarine cable connectivity between Peninsular Malaysia, Sabah and Sarawak.
“While TM did not mention the contract value, it was previously reported the project would cost RM800mil of which 50% would be financed by MCMC and the remaining 50% contributed by private party (in this case – TM).
“While the deal is positive for TM, we have expected TM as the leading contender to be awarded the submarine cable project,” said Public Invest Research.
The project will take around 2.5 years to complete and will include laying of submarine cable system connecting Peninsular Malaysia, Sarawak & Sabah and setting up six cable landing stations (Mersing, Kuching, Bintulu, Miri, Kota Kinabalu and Cherating.
Under the PPP partnership, MCMC will be providing 50% of the investment and the remaining 50% to be contributed by the private partner, in this case – TM.
Besides providing partial capex for the project, TM will also be responsible for 20 years of operation and maintenance of SKR1M and be paid accordingly from the USP fund.
“TM will have no problem funding the capex of RM400mil over two years and has the experience in development and investment in submarine cable systems (it is currently involved in more than 10 submarine cable systems),” said Public Invest Research.
http://www.thestar.com.my
KUALA LUMPUR: Public Investment Bank Research is maintaining its Underperform recommendation for Telekom Malaysia with an unchanged target price of RM6.26 based on discounted cashflow valuation.
It said on Wednesday TM had secured a submarine cable project, which StarBiz estimated was worth RM720mil, was positive for the company.
“It was within our expectations and we maintain our call mainly due to stretched valuation. TM is trading at forward (FY15) price-to-earnings (P/E) of 27.7 times and EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) of 8.0 times which is at the top end of its historical trading range.
“TM’s earnings may face headwinds from consolidating P1’s losses from 4QFY14,” it said in a research note.
Under the contract awarded by Malaysian Communications and Multimedia Commission (MCMC), TM will build a submarine cable system called Sistem Kabel Rakyat 1Malaysia (SKR1M).
The SKR1M will span approximately 3,500km with an initial capacity of 4 Tbps and enhance the submarine cable connectivity between Peninsular Malaysia, Sabah and Sarawak.
“While TM did not mention the contract value, it was previously reported the project would cost RM800mil of which 50% would be financed by MCMC and the remaining 50% contributed by private party (in this case – TM).
“While the deal is positive for TM, we have expected TM as the leading contender to be awarded the submarine cable project,” said Public Invest Research.
The project will take around 2.5 years to complete and will include laying of submarine cable system connecting Peninsular Malaysia, Sarawak & Sabah and setting up six cable landing stations (Mersing, Kuching, Bintulu, Miri, Kota Kinabalu and Cherating.
Under the PPP partnership, MCMC will be providing 50% of the investment and the remaining 50% to be contributed by the private partner, in this case – TM.
Besides providing partial capex for the project, TM will also be responsible for 20 years of operation and maintenance of SKR1M and be paid accordingly from the USP fund.
“TM will have no problem funding the capex of RM400mil over two years and has the experience in development and investment in submarine cable systems (it is currently involved in more than 10 submarine cable systems),” said Public Invest Research.
http://www.thestar.com.my
