• Maintain BUY (TP: RM7.08). TM's 3MFY24 revenue remained relatively flat, showing a slight increase of +1.8% YoY, which aligned closely with our anticipated figure of 22%. However, TM's 3MFY24 net profit surged to RM425mn, marking a significant YoY increase of +28.7% YoY, above our expectations but within consensus estimates at 32% and 26% respectively. This variance from our projection was primarily attributed to lower-thananticipated depreciation & amortisation in the current quarter. Note that the group’s depreciation & amortisation down by -13.2% QoQ and -19.6% YoY due to impairment and accelerated depreciation. Maintain a BUY call with a higher TP of RM7.08 (from RM7.06). Our valuation is derived based on DCF valuation with a WACC of 7.4% and a long-term growth of 1.0%.

• Key highlights. Segment-wise, Unifi business recorded lower revenue, slightly down by -1.0% QoQ and -2.7% YoY due to higher reduction of voice & mobile services despite the increase of fixed broadband subscriber. Note that the fixed broadband segment of Unifi grew by 1.8%, reaching 3.14mn subscribers. TM Global recorded a +12.1% YoY increase in revenue, reaching RM742.8mn. This growth was supported by higher revenue from (i) Managed Wavelength services (due to the successful provisioning of these services for hyperscalers) and (ii) Indefeasible Right of Use (driven by global carriers connecting Malaysia to the rest of the world).

• Earnings Revision. We revised our FY24-FY26F earnings forecast higher by 3.8%/1.5%/1.5% respectively, as we revised our depreciation & amortisation assumptions.

• Outlook. Despite the relatively stable Unifi ARPU in the current quarter, we anticipate TM to maintain resilient earnings in FY24 supported by higher demand for data. In regards with Unifi Mobile, we are optimistic about its top-line growth in the coming quarter. TM has guided that the group is currently focusing more on conversion offerings. With the recent launch of the UniVerse campaign, we believe that this will lead to higher adoption and revenue of Unifi Mobile. To recap, on 27 May 2024, Unifi launched UniVerse, a comprehensive suite of home internet, mobile, entertainment, and lifestyle solutions designed to meet the diverse needs.

Source: BIMB Securities Research - 31 May 2024