TM
Telekom Malaysia Berhad
Company Background
SNS Network Secures RM269.3mil Server Supply Contract
SNS Network Technology Bhd's wholly-owned subsidiary, SNS Network (M) Sdn Bhd, has secured a RM269.3mil contract from a Malaysian private company to supply server systems.
In a filing with Bursa Malaysia, SNS Network said the scope of work includes supplying the server system, with commencement on March 7 and completion targeted for April 18, 2025 or within an extended period if required.
SNS Network expects the contract to contribute positively to the earnings and net assets of the company and its subsidiary throughout its duration.
It added that the customer's name was withheld for confidentiality and commercial reasons.
Meanwhile, SNS Network, in collaboration with NVIDIA, has launched a fully managed AI cloud infrastructure service in Malaysia, powered by 64 NVIDIA Hopper GPUs across eight Dell PowerEdge XE9680 servers with NVIDIA Quantum-2 InfiniBand networking and NVIDIA AI Enterprise software.
SNS Network is providing GPU-as-a-Service through its AI Factory to accelerate AI adoption among Malaysian enterprises and support industry growth with training and Proof of Concept activities.
SNS Network’s AI Factory, located at Telekom Malaysia Bhd's Klang Valley Data Center in Cyberjaya, will allocate half of its computing capacity for commercial use, while the other half will support AI growth through POCs, industry training, bootcamps, and hackathons.
Managing Director Ko Yun Hung said the SNS Network GPUaaS AI Factory featured local hosting, ensuring data sovereignty and compliance with Malaysia’s data privacy and security regulations.
He added that the scalable service provided technology developers with access to advanced AI infrastructure without heavy capital investment, allowing them to scale computing needs on demand.
$SNS / 0259 (SNS NETWORK TECHNOLOGY BERHAD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Source: The Star
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by CGSI
PUBLIC INVEST TOP PICKS 2025...
Threading Water.
To navigate protectionism policies from the West, Malaysia is expected to focus on driving its domestic economy through continuous fiscal reform efforts and strengthening trade alliances with ASEAN and the Global South countries. Although Malaysian economy should remain robust in 2025, the local equities market may still be susceptible to external shocks. The heightened geopolitical risks and anti-globalisation rhetoric will introduce more uncertainties and volatility in the financial markets. Therefore, we do not think a gradual reversion to the long-term mean of 16x PER is possible. We peg our 2025 KLCI year-end target at 1,700 points based on 14.5x 2026F PER. With the market still being a trading-oriented one, we believe market-beating opportunities
will come from bottom-up approach and buying on weaknesses in a heightened risk premium environment. The data centre industry should continue to deliver positive newsflow in terms of new construction and infrastructure-related jobs as well as investments from foreign companies. Companies with exposure to this industry are Telekom, Tenaga, Gamuda and Cloudpoint. Meanwhile, consumer spending on non-discretionary products and services should also increase given a resilient labour market and economic conditions. We like Maybank, CCK, Focus Point and Optimax as their growth is more dependent on the domestic market.
$CLOUDPT / 0277 (CLOUDPOINT TECHNOLOGY BERHAD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
$OPTIMAX / 0222 (OPTIMAX HOLDINGS BERHAD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by Kenanga
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by CGSI
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by RHB
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by PBIV
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by HLIB
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research Report by APEX
The termination of the share subscription agreement (SSA) by Digital Nasional Bhd (DNB) has lowered Telekom Malaysia Bhd’s (TM) chance in the tender for the second 5G network, but it may be a blessing in disguise.
Cisco Systems Inc, a global technology company, has signed collaboration agreements with Telekom Malaysia Bhd (TM) and Permodalan Nasional Bhd (PNB) under its Country Digital Acceleration (CDA) programme, aiming to drive artificial intelligence (AI) innovation in Malaysia.
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by RHB
UBS report on datacenter
Cannot upload cos file too big.
But here's summary:
The data centre (DC) story has been a strong driver for Malaysia, with Microsoft, Google, Amazon and ByteDance collectively announcing investments of around US $12bn (about RM60bn). To attempt to answer key investor questions we have looked at the implications of these investments across the entire Malaysian market. While we think investor concerns about oversupply are partly warranted in the short term, long-term trends are robust (15% supply and demand CAGRs for 2024E-50E) with AI demand set to balance the market, in our view. Our analysis of global cloud regions suggests land demand in Malaysia of 32-249 acres pa over H224-2028, positive for developers. DC-related sectors including construction, utilities and property, as well as Telekom Malaysia (TM), are up 22-37% YTD and we expect further upside for TNB, TM, Mah Sing and global DC operator GDS.
$TM / 4863 (TELEKOM MALAYSIA BERHAD) $MAHSING / 8583 (MAH SING GROUP BERHAD) $TENAGA / 5347 (TENAGA NASIONAL BHD) $YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD) $CRESNDO / 6718 (CRESCENDO CORPORATION BERHAD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Kenanga
OUTPERFORM– TP RM7.53
"Bullish on DC-to-DC Connectivity”
TM’s 1HFY24 results tracked expectations as topline was flattish due to a drag by Unifi. Expansion in pretax profit (due to absence of accelerated depreciation) was offset by the absence of tax incentives, resulting in weaker bottomline. Moving forward, TM expects tremendous revenue opportunities in DC-to-DC connectivity. We maintain our forecasts, TP of RM7.53 and OUTPERFORM call.
Analyst:
Kylie Chan Sze Zan
kyliechan@kenanga.com.my
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Public
Outperform – TP RM8.80
"Broadly Within Expectation”
Telekom Malaysia (TM) posted a 30.3% YoY decline in 2QFY24 net profit mainly due to utilisation of tax losses in the previous year, which resulted in a tax credit versus tax expense in the current quarter. For 1HFY24, the results accounted for 58% of our full-year estimates but met consensus forecast at 51%. Nevertheless, we deem the results to be in line with our expectation as the cumulative profit is inclusive of a one-off arbitration settlement received from MYTV, in which the amount was not disclosed by management. Note that in the arbitration, TM had filed for a claim of RM99.6m against MYTV. We make no changes to our FY24-26F earnings forecasts, as we are also expecting depreciation cost to increase in 2H24. TM remains our top pick in the telco space owing to its leading position as the country’s key network infrastructure provider. In addition, we believe TM is likely to be a prime beneficiary of the booming data centre industry in Malaysia. Maintain Outperform. A higher interim dividend of 12.50sen per share was declared (2QFY23: 9.50sen).
Analyst:
Eltricia Foong
eltriciafoong@publicinvestbank.com.my
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Maybank
BUY – TP RM 7.50
"Cautious guidance continues”
2Q24 core net profit was in line with our/consensus expectation, with management’s unchanged FY24 EBIT guidance alluding to an uptick in costs. Longer-term, we note that TM is conceptually a beneficiary of Malaysia’s data centre boom (through connectivity offerings), and its strong FCF generation leaves ample headroom for increased dividends. Maintain BUY with an unchanged DCF-based TP of MYR7.50.
Analyst:
Tan Chi Wei, CFA
chiwei.t@maybank-ib.com
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by APEX
HOLD – TP RM 7.21
"Within expectations”
• Telekom reported 2QFY24 core net profit of RM397.8m (+0.1% qoq, - 26.5% yoy) and 1HFY24 core net profit of RM795.1m (+10.0% yoy), which was in-line with ours and consensus’ expectations, accounting for 50% of both forecasts respectively.
• Kept our earnings forecast unchanged for FY24 but revised our FY25- FY26 earnings by +2.7%/+2.5%, incorporating the earlier-than- anticipated earnings contribution from the data center.
• Re-iterate our HOLD recommendation with a higher target price of RM7.21 based on DCF valuation (WACC of 8.3% with a long-term growth rate of 0.5%).
Analyst:
Steven Chong
stevenchong@apexsecurities.com.my
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by TA
BUY – TP RM7.93
"FY24’s Guidance Intact”
After incorporating a 4-star ESG premium based on our latest internal guidelines, we revised the target price from RM7.70 to RM7.93. We value the stock based on DCF valuation with a WACC of 8.5% and a LT growth rate of 2.0%. Maintain a Buy call on the stock.
Analyst:
Chan Mun Chun
mcchan@ta.com.my
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by MIDF
NEUTRAL– TP RM7.03
"Profitability Impacted in Absence of Tax Credit”
• Maintain NEUTRAL with an unchanged target price of RM7.03 following the 2QFY24 results announcement
• 1HFY24 earnings down by -8.6%yoy to RM821.8 in view of higher effective tax rate as PBT expanded by +25.0%yoy to RM1.1b
• Nevertheless, this was within our expectation as we assumed a -9.7%yoy reduction in FY24 earnings to RM1.7b
• Revenue pressure to persist across all the three main business segments while we see more effort needed to manage cost
Analyst:
Foo Chuan Loong, Martin
martin.foo@midf.com.my
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
$KLSE-CDB
$MAXIS / 6012 (MAXIS BERHAD)
$YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Kenanga
OUTPERFORM – TP RM7.53
" Termination of Share Sale Agreement”
TM received a termination notice from Digital Nasional Berhad (DNB) for the Share Subscription Agreement (SSA) signed on 1 Dec 2023. From a positive standpoint, not having equity ownership in either 5G networks could allow TM to allocate more resources to its core fixed connectivity business. We maintain our forecasts, TP of RM7.53 and OUTPERFORM call.
Analyst:
Kylie Chan Sze Zan
kyliechan@kenanga.com.my
$KLSE-CDB $MAXIS / 6012 (MAXIS BERHAD) $TM / 4863 (TELEKOM MALAYSIA BERHAD)
$VTC / 0319 (VETECE HOLDINGS BERHAD) $TM / 4863 (TELEKOM MALAYSIA BERHAD)
Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - KUMPULAN WANG PERSARAAN (DIPERBADANKAN)
$KLSE-CDB
$MAXIS / 6012 (MAXIS BERHAD)
$YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Public
Outperform – TP RM8.80
" Hidden Value In Data Centre"
The Malaysia Digital Economy Blueprint (MyDigital Blueprint) was launched in February 2021, aiming to accelerate the country’s transformation into a high-income nation and technologically-advanced economy by 2030. As part of the strategy under the MyDigital Blueprint, the Malaysian government has given approvals for Microsoft, Google, Amazon and Telekom Malaysia (TM) to invest in hyperscale data centres. We expect more new infrastructure (i.e internet exchange points, cable landing stations and fibre optic cables) to be developed to cater for the expanding IT load. TM is seen as one of the prime beneficiaries of this booming market, as major cloud and internet companies would also demand for services connecting data centres with terrestrial as well as global subsea cable networks. We raise our FY25-26F earnings forecasts by 4-7% to capture additional contribution from TM Global and TM One. Also, we estimate that TM’s partnership with Singtel to build and operate a 64MW greenfield data centre may potentially lead to an earnings uplift of ~24% at steady state. Valuing this data centre at RM8.1bn (effective stake of 51%), we raise our TP for TM to RM8.80.Upgrade to Outperform.
Analyst:
Eltricia Foong
eltriciafoong@publicinvestbank.com.my
Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEE PROVIDENT FUND BOARD (EPF BOARD)
Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - KUMPULAN WANG PERSARAAN (DIPERBADANKAN)
Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - AMANAHRAYA TRUSTEES BERHAD-AMANAH SAHAM BUMIPUTERA
Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEE PROVIDENT FUND BOARD (EPF BOARD)