KUALA LUMPUR: Research companies are positive on Time
dotCom Bhd's (TDC) proposal to distribute up to 137.5 million DiGi.com Bhd's shares to its shareholders.

In a note today, OSK Research Sdn Bhd said the proposal was wise on TDC's part in rewarding its shareholders without being taxed for distributing its 1.8 per cent stake (137.5 million shares) in DiGi.

"The latter's share price has appreciated by more than 100 per cent over the past four years and monetising those shares by selling them off for cash would have led to a reduction of shareholders' wealth as the gain would be taxed," it
said.

OSK said distributing a dividend-in-specie was the best way of maximising this portion of wealth to the benefit of TDC shareholders.

It said the group was, however, only looking to give out shares equivalent to 1.8 per cent stake in DiGi instead of its entire 3.5 per cent stake given the limited distributable reserves in its books.

OSK said it was pleased that TDC has opted to reduce its reliance on non-core assets to boost its bottom-line going forward.

The research house maintained its 'buy' call on the company with target price RM3.50.

HwangDBS Vickers Research Sdn Bhd said TDC's proposal, which would be completed by first half of 2013, was a positive move, as it would unlock the value of the company's stake in DiGi shares.

"This provides shareholders with direct exposure to DiGi dividends as well as allows its strong performance to be realised at the investor level," it said in a note.

It said year-to-date, the absolute value of TDC's stake in DiGi has risen by 35 per cent from RM1 billion to RM1.3 billion.

"However, this has not been reflected in TDC's share price, which has been flat and lagging far behind DiGi's.

"Hence, TDC's share price may pick up as its stake still makes it a proxy to DiGi's strong operational and financial performance," it said.

HwangDBS Vickers has recommended a 'trading buy' on the counter. -- BERNAMA