KUALA LUMPUR (Aug 30): Shares of Telekom Malaysia Bhd (TM) rose 1.81% during the morning session after reporting improved net profit and earnings for the first half of the year ended June 30, 2021 (1HFY21).

As of 12:28 p.m., TM stood at RM 6.15 per share, up nine sen or 1.49%, after 2.3 million shares changed hands. This puts the company at a market capitalization of RM 23.21 billion.

Since the start of the year, the counter has grown by around 13.3%.

Last Friday (August 27), TM announced a 27.3% increase in net profit to RM 544.06 million for 1HFY21, up from RM 427.27 million in the same period last year, so that revenues improved to RM 5.57 billion from RM 5.15 billion. .

However, its second quarter net profit (2TFY21) fell 20.44% to RM 218.59 million from RM 274.75 million a year earlier, citing an increase in operating costs that included accrued provisions. as part of the group’s workforce optimization initiatives.

TM said fiscal year 2QFY21 revenue reached RM 2.76 billion from RM 2.59 billion, aided by “increased revenues for all services except non-telecommunications services.” .

For 2QFY21, TM also declared a dividend of seven sen per share.

In a report released today, CSG-CIMB Research has kept its forecast given all online results and sees basic earnings per share (EPS) for fiscal year 21F / 22F / 23F up 17 , 9% / 17.8% / 18.7% year over year (yoy) on revenue recovery, with cost controls cushioning any pressure from its accelerated fiber deployment.

He raised the target price of TM to RM7.50 from RM7, after shifting the base year of discounted cash flow (DCF) to FY22F.

“The EBITDA margin contracted by 2.9 [percentage points] quarter-on-quarter (stable year-on-year) at 37.2% in 2Q21. This was driven by an increase in others (normalization after lows in 1Q21) and direct operating expenses (higher installation and customer acquisition costs due to strong growth of Unifi submarines) , as well as workforce optimization costs (around RM80 million).

TM attributed the latter to its Voluntary Separation Program (VSS) implemented during the quarter, which has a payback period of just over a year and will lead to ongoing cost savings going forward. “, noted CGS-CIMB in a report today.

“He plans to continue to undertake VSS in the years to come, as part of his New TM transformation program,” he added.

The research house noted that the key re-rating catalyst for TM is stronger earnings for fiscal year 21-22F while downside risks are higher than expected operating expenses and unfavorable regulatory developments. .

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