After making a  capital repayment of RM0.02/share and  the company's  capital restructuring, Time dotCom's (TDC) shares will trade ex tomorrow.

Adjusting share price and FV. In its just completed capital restructuring, TDC sought to: (i) wipe out its entire retained losses, and (ii) conduct a 5-into-1 share consolidation. In the exercise, the company reduced its share capital by RM2.3bn (a capital reduction of 2,530.8m shares from RM1.00 to RM0.10 per share), and subsequently cancelled a portion of its share premium to eliminate its accumulated losses. The company's number of shares shrank in by 5x to 506.2m shares after the 5-into-1 share consolidation plan. This means that  the share price  should  adjust to RM3.23  versus  RM0.665 currently,whereas our fair value (FV) will be revised to RM4.25 (Table 1) from RM0.87 previously.

Maintain BUY, with  FV RM4.25, post capital repayment and share consolidation. On the conclusion of these exercises, TDC would be able to proceed to its next phase of growth and transform itself into a regional wholesale service provider via the acquisition of Global Transit entities and AIMS Group, slated to be completed by 2HFY12. As for its 1QFY12 results  tentatively due for  release next  week, we expect TDC's financial performance to be largely in line with our estimates. We continue to like the stock's cheap valuation and  are reiterating our BUY recommendation, with a post-capital repayment and share consolidation FV of RM4.25, based on a sum-of-the-parts (SOP) valuation. We see the recent share price  decline as a good opportunity to accumulate TDC shares.

Source: OSK188