TIME dotCom expected to sustain earnings momentum

PETALING JAYA: TIME dotCom Bhd is expected to sustain its earnings momentum, supported by continued growth in home fibre subscribers, stronger demand from hyperscalers and an improvement in its cloud business, although its share price has already reflected some of the positive developments.

Kenanga Research said the telecommunications company’s performance for first-half of the financial year ending December 2026 (1H26) remained on track, with stronger revenue and multi-year high earnings before interest, tax, depreciation and amortisation (Ebitda) margins.

“Growth was driven by home fibre (subscriber expansion and stable average revenue per user or ARPU) and stronger wholesale demand from hyperscalers,” the research house said in a report last Friday.

It added that cloud revenue appeared to have stabilised, supported by subscriber growth in TIME’s alternative cloud offering beyond VMware.

Kenanga Research kept an “outperform” call and raised the target price (TP) by 10% to RM7.26 from RM6.60, while Hong Leong Investment Bank (HLIB) Research retained a “hold” recommendation and RM5.50 TP.

The differing views reflect valuation considerations, with the latter noting that TIME’s shares have re-rated significantly since December 2025 following management’s indication of a more proactive approach to capital management and balance sheet optimisation.

TIME’s second-quarter (2Q26) core profit after tax and minority interest rose 3% quarter-on-quarter (q-o-q) and 13% year-on-year (y-o-y) to RM128mil, bringing 1H26 core earnings to RM253mil, according to HLIB Research.

The six-month performance was broadly in line with expectations, accounting for about 49% of its full-year forecast and consensus’ estimates. Revenue rose 5% q-o-q to RM478mil in 2Q26, led by a 14% increase in enterprise revenue on higher service integration income. Retail and wholesale revenue each grew 2%.

On a y-o-y basis, revenue increased 7%, driven by an 11% increase in wholesale revenue amid stronger connectivity demand and a 9% rise in retail revenue as fibre subscribers continued to grow.

Kenanga Research similarly highlighted the contribution from the retail and wholesale businesses, saying 1H26 revenue increased 7% y-o-y, supported by a 5% expansion in the retail subscriber base and stronger wholesale demand, particularly from hyperscalers.

TIME ended 2Q26 with 524,000 fibre subscribers, up by about 6,000 from the previous quarter, while ARPU remained unchanged at RM117.

Kenanga Research noted that the company had maintained an uninterrupted streak of subscriber growth.

Concurrently, TIME’s cloud business appears to be emerging from a prolonged period of weakness, with the research house reporting that the group believes cloud service revenue had stabilised after customers reduced VMware licence renewals following its shift to a subscription model. TIME has partly offset this through its Time Cloud Services offering, powered by Huawei Cloud.

Kenanga Research expects gradual growth ahead, although it cautioned that the cloud remains a complementary enterprise product rather than a high-growth flagship business – given the dominance of global hyperscalers.

The company declared a special interim dividend of 5.41 sen per share, which HLIB Research said was in line with management’s commitment to review special dividends semi-annually.

Kenanga Research favours TIME for its exposure to enterprise connectivity at new hyperscale data centres (DCs), regional expansion of AIMS DCs and potential earnings accretion from AIMS’ planned US$1bil 200MW artificial intelligence-focused DC in Cyberjaya, targeted for launch in 2027.

HLIB Research sees the risk-reward as balanced at the current share price of RM6.01, with the stock trading at 20.8 times financial year 2027 earnings and offering a 3.5% net yield excluding special dividends.

It maintained a RM5.50 discounted cash flow-based target price.

Kenanga Research raised the target price to RM7.26 based on a 14.4 times enterprise value/Ebitda valuation, maintaining an “outperform” call.