Hot Stock TIME dotCom falls 6.7% on profit-taking after yesterday's gain

by **Cals** Fri 18 Apr 2014, 02:36

Hot Stock TIME dotCom falls 6.7% on profit-taking after yesterday's gain

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 17 April 2014 16:29

KUALA LUMPUR (Apr 17): TIME dotCom Bhd fell as much as 6.7% on profit-taking activity after the fixed-line telecommunications provider rose 24 sen or 5.44% yesterday over its participation in the AAE-1 submarine cable system.

On Tuesday, TIME dotCom announced its involvement in a consortium to build a new submarine cable system that will link Asia and Europe via the Middle East.

At 4.08 pm today, TIME dotCom lost 28 sen or 6% to RM4.37. The second top loser saw some 2.2 million shares done.

In a note, Maybank Investment Bank Research said the participation would provide the firm increased flexibility in terms of internet transit product.

“From a strategic standpoint, participation in AAE-1 allows TIME dotCom to own bandwidth capacity from ASEAN to MENA/Europe, thus providing increased flexibility with regards to its internet transit product,” said Tan Chi Wei, research analyst at Maybank IB.

Tan said he upgraded target price to RM4.60 from RM4.40, but downgraded the stock to ‘hold’ from ‘buy’, following the stock’s recent rally.

He said earnings forecasts FY15 and FY16 are marginally lowered by 0.7% and 1.6% to account for higher capital expenditure.

Management has estimated its total investment at US$44 million (RM142.5million) for a 5% stake.

“We project capex for AAE-1 to peak in 2015, but TIME dotCom will still remain in a net cash position during the construction phase,” said Tan.

Additionally, the Maybank IB analyst expects the AAE-1 project to provide incremental revenue of RM12 million, when it becomes operational in 2017.

Kenanga Research, in a separate note, sees immediate technical support and resistance levels at RM4.41 and RM4.67 respectively for the firm.