• Maintain BUY (TP: RM6.09). TIME’s 9MFY23 revenue of RM1,169mn (+10.4% YoY) was supported by higher contribution from Retail (+19.0% YoY), followed by Enterprise (+17.0% YoY) and Wholesale business (+6.0% YoY). In tandem, the group’s net profit surged by +>100% YoY. Excluding one-off non-recurring revenue, TIME recorded core net profit of RM310mn (+7.6% YoY) which was in-line with our but slightly below consensus expectations, accounting for 70% and 68% respectively. We foresee TIME's data business to expand further, supported by a favourable outlook for increased internet connectivity in individual and business daily usage. Maintain a BUY call on TIME with an unchanged TP of RM6.09 (WACC: 6.4%; g: 1.0%).

• Key highlights. In 3QFY23, TIME’s revenue recorded a double-digit growth of +14.0% YoY, mainly attributed to higher Data revenue, which increased by +16.0% YoY. However, the group's net profit experienced a decline of - 8.7% YoY due to the absence of revenue and pre-tax profit from discontinued operations, which were finalised in April 2023 after the divestment of stakes in AIMS Data Centre Holdings Sdn Bhd and AIMS Thailand. It's important to note that the group classifies AIMS' financial results up to 20 April 2023 as discontinued operations. Nonetheless, TIME's core net profit saw a positive trajectory, rising by +4.7% YoY, driven by increased revenue, albeit partially offset by elevated network, operating expenses, and depreciation. On a QoQ basis, net profit further increased by +5.8%, supported by positive growth across all customer groups, led by enterprise (+6.0% YoY), wholesale (+8.0% YoY), and retail customers (+4.0% YoY).

• Earnings Revision. No changes to our forecast.

• Outlook. Going forward, we anticipate significant contributions from data and data centre operations, driven by higher data demand. While we believe that reinvesting the proceeds from divestment can enhance product quality and gradually expand the group's core businesses, we think that intense competition posed by other service providers in terms of network coverage and the array of services they offer, could impact TIME's business segments.

Source: BIMB Securities Research - 23 Nov 2023