COMMENTS ON TELEKOM MALAYSIA BERHAD (4863)

FIGURE 1: TELEKOM MALAYSIA BERHAD LAST 2 YEARS SHARE PRICE TREND

**analysis based on 2018 annual report.

1.       GENERAL INTRO: Telekom Malaysia Bhd is a triple-play telecommunications company. It generates revenue from the provision of fixed-line voice services, data, and broadband and multimedia services to businesses and individual households and consumers. Broadband and multimedia services are the majority of company revenue. Data is composed of products such as Ethernet and Internet protocol services. Additionally, the company's voice product generates revenue from providing business and residential telephony services. The company owns telecommunications infrastructure. It generates the vast majority of its revenue in Malaysia.

2.       NOTABLE POINTS:

a.       according to 2018 report, TM currently has around 2.9 million customers, other notable information including: >540,000 km fibre-optics cables, >246,000 km copper cables, >20 submarine cable systems, >3,400 LTE sites, >13,000 WiFi hotspots, 12 data centres and >24,000 employees

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (million): ~11819 million in 2018 annual report, this is a high revenue company.

b.      SHARE PRICE: from 2018-2019, share price is decreasing from around RM6 to around RM4

c.       EARNING PER SHARE (EPS): earning per share in last 5 years decreased from 22.9 to 4.1sen,

d.      FUTURE POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected to be stable.

e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 2140 million, around 11% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2018 report, Telekom declared a total dividend payout of 2  sen per share, amounts to dividend yield of 0.52 % based on current share price.

b.      CONSISTENCY: consistent dividend payout, last five years (2015-2019) dividends declared range between 2 to 22.9 sen per share.

c.       DIVIDEND PAYOUT RATIO: in 2018 financial year, Telekom paid out about 49% of its earnings to investors in the form of dividend.

5.       IS THE MANAGEMENT PERFORMANCE GOOD?

a.       RETURN ON EQUITY (ROE): in 2018 financial year, Telekom achieved a reasonable return of shareholders’ equity, at 10%.

b.      COST-TO-INCOME RATIO: cost-to-income ratio is very high at about 67827%.

6.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 2756.5 million, equivalent to RM 0.73 per share

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is very well supported by institutional investors, there are 30 institutional investors at top 30 major shareholders list, including EPF (17.45%) and PERMODALAN NASIONAL BERHAD (0.9%), SKIM AMANAH SAHAM BUMIPUTERA (11.84%), KUMPULAN WANG PERSARAAN (4.1%), KHAZANAH NASIONAL BERHAD (26.21%) and insurance companies and investment funds.

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