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CIMB Research downgrades Telekom Malaysia to Reduce, cuts target price
by Cals Tue 01 Apr 2014, 13:53
| CIMB Research downgrades Telekom Malaysia to Reduce, cuts target price |
| Business & Markets 2014 |
| Written by theedgemalaysia.com |
| Tuesday, 01 April 2014 09:31 |
KUALA LUMPUR (April 1): CIMB Research has downgraded Telekom Malaysia Bhd (TM) to a Reduce (from Hold) at RM5.93 with a lower target price of RM5.40 (from RM5.70) and said the utility giant’s proposed acquisition of 57% equity in WiMAX operator P1 was pricey and required hefty future investment, although the research house had a positive view of its benefits.
In a note March 31, the research house said the acquisition price has an 84% premium over Jasmine’s valuation and can only be justified if P1’s subscriber base grows fourfold.
“TM’s proposition will be enhanced if it can secure approval for the use of its 850MHz spectrum for non-USP purposes.
“We cut our DCF-based target price by RM0.30 to RM5.40 after we trim FY14-16 EPS by 1-3% and raise WACC from 8.9% to 9.1% to reflect the higher risk of the mobile operations.
“We urge investors to sell into the recent strength in share price. DiGi is our top Malaysian telco pick,” it said.
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