TIMECOM (5031) - TimedotCom gains RM202.1m from DiGi stake disposal
April 14, 2015 : 10:36 AM MYT
TimedotCom Bhd
(April 13, RM6.25)
Maintain neutral with a revised target price (TP) of RM6.20 from RM5.40 previously. TimedotCom Bhd (Time) ( Financial Dashboard) announced that it had completed the disposal of 49.9 million shares representing a 0.64% stake in DiGi.Com Bhd ( Financial Dashboard), via a placement at a price of RM6.23 per share. The disposal resulted in a net gain of RM202.1 million, and the proceeds will be used for working capital purposes. Post-disposal, Time will be left with about 68.5 million DiGi.Com shares, which we estimate could still result in a total dividend income of about RM14 million for the year. Time also announced the proposal of a share option grant to its chief executive officer to subscribe up to 17.2 million shares in Time, representing 3% of Time’s existing issued and paid-up share capital. The company expects this to be completed by the third quarter of financial year 2015 (3QFY15).
We believe that the timing is right for the disposal, as this has allowed the company to boost its war chest. Time will be capex-intensive over the next one to two years leading up to the commissioning of its three new cables (APG, AAE-1 and Faster). Note that the extra funding could also be used to upgrade its Unity cable’s capacity at an estimated cost of US$300,000 (RM1.11 million) to US$400,000, given that Unity is almost approaching full utilisation. FY15 growth will continue to be underpinned by the increasing local demand for long-term evolution (LTE) network rollouts, specifically that of DiGi.Com, which has front-loaded its LTE targeted number of sites and as such will need to convert these sites to fibre-optics.
No change to our earnings forecasts as we previously excluded the income from DiGi.Com in our core profit calculations.
Our discounted cash flow-based TP is lifted after making adjustments to our working capital and revising our weighted average cost of capital to 7.2% (from 7.4%) as we were too conservative about our previous valuation. We reiterate that Time’s future rerating catalysts will come from the commission of its new cables, although regulatory delays remain a key risk for the commissioning of the new cables. — RHB Research, April 13
http://www.theedgemarkets.com
April 14, 2015 : 10:36 AM MYT
TimedotCom Bhd
(April 13, RM6.25)
Maintain neutral with a revised target price (TP) of RM6.20 from RM5.40 previously. TimedotCom Bhd (Time) ( Financial Dashboard) announced that it had completed the disposal of 49.9 million shares representing a 0.64% stake in DiGi.Com Bhd ( Financial Dashboard), via a placement at a price of RM6.23 per share. The disposal resulted in a net gain of RM202.1 million, and the proceeds will be used for working capital purposes. Post-disposal, Time will be left with about 68.5 million DiGi.Com shares, which we estimate could still result in a total dividend income of about RM14 million for the year. Time also announced the proposal of a share option grant to its chief executive officer to subscribe up to 17.2 million shares in Time, representing 3% of Time’s existing issued and paid-up share capital. The company expects this to be completed by the third quarter of financial year 2015 (3QFY15).
We believe that the timing is right for the disposal, as this has allowed the company to boost its war chest. Time will be capex-intensive over the next one to two years leading up to the commissioning of its three new cables (APG, AAE-1 and Faster). Note that the extra funding could also be used to upgrade its Unity cable’s capacity at an estimated cost of US$300,000 (RM1.11 million) to US$400,000, given that Unity is almost approaching full utilisation. FY15 growth will continue to be underpinned by the increasing local demand for long-term evolution (LTE) network rollouts, specifically that of DiGi.Com, which has front-loaded its LTE targeted number of sites and as such will need to convert these sites to fibre-optics.
No change to our earnings forecasts as we previously excluded the income from DiGi.Com in our core profit calculations.
Our discounted cash flow-based TP is lifted after making adjustments to our working capital and revising our weighted average cost of capital to 7.2% (from 7.4%) as we were too conservative about our previous valuation. We reiterate that Time’s future rerating catalysts will come from the commission of its new cables, although regulatory delays remain a key risk for the commissioning of the new cables. — RHB Research, April 13
http://www.theedgemarkets.com
