Healthy EBITDA delivery
Overshadowed by asset write-down
4Q21 core net profit was below our/consensus forecasts due to higher-than-expected D&A in relation to the mobile assets. This overshadowed the healthy EBITDA delivery in FY21. The overall outlook remains
favourable in our view, with TM potentially benefiting from work-from-home / 5G-deployment themes, and ongoing cost optimisation. Reiterate BUY with a higher MYR7.50 (+1%) TP.
Below expectation
TM’s 4Q21 core net profit of MYR129m (-34% YoY, -58% QoQ) brings FY21 core net profit to MYR1,019m (+3% YoY), 9%/10% below our/consensus forecasts. While we had expected possible cost loading in 4Q21, TM surprised us by booking c.MYR122m of impairment/accelerated depreciation in relation to the mobile assets. A 6.0sen DPS was declared, bringing full year DPS to 13sen (-9% YoY), representing a 48% payout ratio.
EBITDA performance was healthy
4Q21 revenue grew 12% QoQ driven by higher contribution from internet (+3% QoQ), data (+24% QoQ) and others (+42% QoQ). Unifi continue to post strong subscriber net adds. All customer segments posted sequential revenue growth. Opex meanwhile was up 10% QoQ on higher direct and other costs (typical cost loading in 4Q). This resulted in 4Q21 normalised EBITDA margin expanding by 1.6ppt QoQ to 39.0%. Meanwhile, D&A was up sharply QoQ as TM booked c.MYR122m of impairment/accelerated depreciation in relation to the mobile assets.
Raising earnings
For FY22, management is guiding for: 1) low to mid single-digit revenue growth, 2) EBIT of >MYR1.8b and 3) capex-to-sales of 14%-18%. We raise our FY22/FY23 net profit by 8%/9% to reflect latest guidance, and
introduce FY24 forecasts. Our TP (DCF-based assuming 8.0% WACC and 2% growth) is raised marginally to MYR7.50 (+1%).