KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
BIMB Securities Maintains ‘Overweight’ on Telco Sector, Citing Strong 5G Monetisation Prospects and Data Centre Growth
BIMB Securities has reaffirmed its "overweight" stance on Malaysia's telecommunications sector, highlighting optimism over better 5G monetisation, increased certainty in the final structure of the country's 5G network, and the growth of data centres. The research house believes these factors could improve market sentiment and drive revenue growth for telco companies.
Key Takeaways:
Positive Outlook for 5G Monetisation and Data Centres: BIMB Securities anticipates improved 5G monetisation opportunities, bolstered by attractive 5G-related bundling packages and convergence plans designed to support average revenue per user (ARPU). The firm also points to a growing investment in data centres as a key growth driver, particularly with the Malaysian government's approval for more data centres, enhancing demand for high-capacity fibre optic networks.
Top Picks: Telekom Malaysia and Time Dotcom: BIMB Securities identifies Telekom Malaysia Bhd (KL) and Time Dotcom Bhd (KL) as its top picks in the sector, maintaining a “buy” rating for both. Telekom Malaysia is viewed as a main beneficiary in both public and private sector service provisions, with a target price (TP) of RM7.77, while Time Dotcom, expected to benefit from growth in data centres, has a TP of RM6.09. Additionally, Maxis Bhd (KL) is seeking further opportunities in the data centre connectivity space.
Steady ARPU and Market Growth: The telecommunications sector in Malaysia, one of Asia’s most developed mobile markets with a penetration rate of 148.5%, is expected to see steady ARPU in the medium term, reflecting market maturity and saturation. BIMB reported that all five companies under its coverage met earnings projections in the first half of FY2024 (1HFY2024), with a sector-wide revenue increase of 3.8% year-on-year (y-o-y). Time Dotcom led the revenue growth with a 10% y-o-y increase, driven by strong retail and wholesale contributions.
In conclusion, BIMB Securities sees strong growth potential in Malaysia's telco sector driven by improved 5G monetisation, data centre expansion, and technological convergence, although challenges such as market saturation remain.
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