TELEKOM Malaysia Bhd (TM) should count is blessing judging by AmResearch’s high regards for the national connectivity and digital infrastructure provider’s soon-to-come on board non-executive chairman Datuk Mohammed Azlan Hashim.
Azlan, 64, will join TM officially on Aug 1. He replaces Tan Sri Mohd Bakke Salleh, 67, who has been appointed as the new chairman of Petroliam Nasional Bhd (PETRONAS).
Bakke is already a non-executive director of PETRONAS as well as the chairman of its risk committee and a member of its audit committee.
According to AmResearch, incoming chairman Azlan has extensive experience in investment and financial services, including as a board member of Khazanah Nasional Bhd as well as on the board and chairmanship of the Employees Provident Fund’s (EPF) investment panel.
He was chief executive of Bumiputra Merchant Bankers Bhd, managing director of Amanah Capital Malaysia Bhd and executive chairman of Bursa Malaysia Securities Bhd.
Azlan is also currently the chairman of D&O Green Technologies Bhd, Marine & General Bhd and IHH Healthcare Bhd.
“We expect Azlan to work well with TM’s managing director/group CEO Imri Mokhtar who has been in that role for a year,” reckoned analyst Alex Goh in a company update. “Under Imri’s direction, TM generated substantive cost savings given its FY2020 operating expenses declined by 6.7% year-on-ear (yoy).”
For 2021–2023, AmResearch said the TM management has identified over 40 key initiatives to drive TM’s next phase of growth.
In 1Q FY2021, TM’s fixed broadband subscribers rose by 110,000 quarter-on-quarter (qoq) as an impressive 175,000 increase in unifi users to two million was partly offset by a 65,000 decline in Streamyx to 492,000.
“This was the highest ever increase in unifi users or 8.3 times Maxis Bhd’s 21,000,” noted AmResearch.
“Given TM’s critical role in the MyDigital initiative with its ownership of the High-Speed Broadband network, we expect a faster pace of growth for its wholesale revenue beyond FY2021F.”
On the same note, the research house also expects TM One’s revenue growth to accelerate with the group’s appointment as the sole Malaysian cloud provider for government data.
All-in-all, AmResearch maintained its “buy” call on TM with an unchanged discounted cash flow (DCF)-based fair value of RM7.10/share based on a weighted average cost of capital (WACC) of 6.2%, terminal growth rate of 2% and neutral ESG (environment, social and governance) rating of three stars.
“The stock currently trades at an attractive FY2021F EV (enterprise value)/EBITDA (earnings before interest, taxes, depreciation, and amortisation0 of six times (half of Maxis Bhd) with a fair dividend yield of 3%,” added the research house.
At 11.14am, TM was up 6 sen or 1% to RM6.04 with 250,500 shares traded, thus valuing the company at RM22.79 bil. – July 13, 2021
