Pleasant dividend surprise
Delivering well
4Q21 results were in line with our/consensus forecasts, with operational trends fairly routine. TDC announced an improved dividend policy of up to 50% payout. Maintain HOLD with a lower DCF-based TP of MYR4.50 (- 2%). We view risk-reward as being balanced presently. We prefer TM (T MK, BUY, CP: MYR5.35, TP: MYR7.40) among the Malaysia telcos.
Results in line
Excluding forex, TDC’s 4Q21 core net profit of MYR107m (+2% YoY, +13% QoQ) brings FY21 core net profit to MYR374m (+9% YoY), 3% below our forecast, and spot on with consensus. TDC declared a 10.86sen interim and a 2.29sen special DPS this quarter, bringing full-year DPS to 21.37sen (+94% YoY), representing a 99% payout ratio. In addition, TDC announced an improved dividend policy of up to 50% payout (25% previously).
Sequential revenue improvement
4Q21 revenue wasup7% QoQ (and 18% YoY), as both data (retail revenue was up 8% QoQ) and data centre (aided by MYR13.4m non-recurring revenue) delivered sequential growth. Meanwhile, costs trended higher in tandem with revenue, resulting in a relatively stable normalised EBITDA margin (-0.2ppt QoQ to 48.9%).For the full year, revenue was up 14% YoY, boosted by the consolidation of AVM and offset by wholesale contraction (challenging submarine cable and subdued incremental fibre spending domestically).
Maintain HOLD
Enquiries for the second Cyberjaya data centre continue to be strong, with meaningful revenue contribution likely in 2022. Plans for newly-acquired Bangunan KWSP remain fluid and are ultimately dependent on local council approvals. We adjust our FY22/23 net profit forecasts by 1%/-4% on housekeeping, and introduce FY24 forecasts. Our TP (DCF-based assuming 7.2% WACC and 2% LT growth) is marginally lowered to MYR4.50 (from MYR4.60).