2021-11-15 03:23:03
Technical tracker - HLIB Retail Research – 15 November 2021
TM(RM5.54) – Brace for a rebound Good time to accumulate. Being the largest fibre infrastructure owner in Malaysia, the recent weakness in TM share price has provided a great opportunity for investors to accumulate the prime beneficiary of Malaysia’s JENDELA and MyDIGITAL initiatives. After tumbling 17% from a high of RM6.66 (9 Feb) to RM5.54 last Friday, TM is currently trading at an undemanding 4.7x FY22 EV/EBIDTA (14% discount against its 5-year average of 5.47x) coupled with an impressive FY21-23 EPS CAGR of 12% (27% higher than industry average of 9.8%).
Twin-turbo boosting TM. Under the JENDELA program, fixed-line players’ accelerated network rollout resulted in an additional 378k new premise passed (2Q21: 342k) in 3Q21 despite the nationwide lockdown. As the government continues to focus on the expansion of the fiber-optic coverage in Malaysia, TM is deemed to benefit from this initiative as higher fiber-optic coverage will drive Unifi subscribers’ growth given that the penetration rate of Malaysia’s fixed broadband market remain low (1Q21 penetration rate: 41%). In addition, under the MyDIGITAL initiative, TM is appointed as the cloud service provider to serve the public sector to build and manage hyper-scale data centers in Malaysia, this is expected to support its cloud computing segment over the next five years.
Good proxy for upcoming window dressing. By compiling TM’s 12-year historical monthly return, 10 out of 12 times TM will register positive return in December with an average return of 5%, this may due to the window dressing activities by funds, in our view. For 2021, we do not rule out the possibilities that TM will be window-dressed underpinned by (1) undemanding valuation; (2) one of KLCI component stocks; and (3) promising prospect supported by government initiative.
Building a base. Technically, any weakness from the current base building supports of RM5.38-5.50 will provide good buying opportunity in the anticipation of window-dressing activities. A successful breakout above its resistance of RM5.70 (FR 0.236) will spur the prices toward RM5.86-RM6.00 levels. Cut lost at RM5.29.
Collection range: RM5.42-5.50-5.54
Upside targets: RM5.86-5.90-6.00
Cut loss: RM5.29
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