TIMECOM - The Time is Nigh (OSK)

With Time dotCom (TDC) expected to announce its 4QFY11 results on 16 Feb, we are anticipating higher income from wholesale and corporate segments to bring its 4QFY11 revenue to RM93.3m. We are also revising our dividend income forecast from its holding in DiGi to RM47.3m, nudging up core profit (ex-tax) to RM96.8m. Following the upgrade of DiGi’s FV to RM4.00, TDC’s SOP valuation increases to RM0.79. Stripping out the market value of its DiGi stake, the street is only valuing the stock at less than 10x FY12 PER (domestic telcos trade at an average of 18x FY12 PER). Our FV of RM0.79 implies a potential upside of 14.5% from the current price.

Multiple proposals on track. On 19 Jan, TDC submitted its application to the High
Court of Malaya to carry out the capital repayment of RM0.02/share and proceed with the capital restructuring exercise. Three months ago, it also managed to secure two term loan facilities to refinance AIMS Group’s existing borrowings of RM22.5m and finance the purchase of five companies belonging to its CEO Afzal Abdul Rahim at RM88m. Management indicated that the multiple corporate proposals are scheduled to be completed sometime this month (please refer to our earlier report dated 5 Jan, The Dots Come Together).