SECTOR FOCUS OF THE DAY
Telecommunication Sector: WANTED: Yet more competition NEUTRAL
We met up with the Malaysian Communications and Multimedia Commission (MCMC) senior management last week and came away with these salient highlights:
1) No change in new Pakatan government’s broadband goals, which is to achieve a 95% broadband coverage for the whole country; 2) More competition remains the MCMC’s goal as part of its overall strategy to lower costs and deliver improved services; 3) Drive to lower costs by encouraging the sharing of network and facility infrastructure amongst telco operators; 4) Minimal costs needed for fibre speed upgrades; 5) Embracing Industry 4.0 to spur manufacturing-based industries’ digitalisation transformation driven by connected technologies; and 5) More incentives may be needed from the government to provide connectivity to remote areas.
Maintain NEUTRAL call given the continued intense competition in both the mobile and fixed broadband markets. Our BUYs are still Axiata and TM due to the game-changing merger possibility which could significantly enhance their earnings and market share trajectory while Maxis and Digi are HOLDs due to the headwinds in gaining revenue growth traction.
Others:
Telekom Malaysia: Relief from NFP cancellation BUY
TSH Resources: Robust FFB growth not enough to offset weak price HOLD
RETAIL RESEARCH
Stocks On Radar: Insas, Malaysian Resources, Formosa Prosonic, Zecon
ECONOMIC HIGHLIGHT
Malaysia: Expect GDP to perform better in 2Q2018
NEWS HIGHLIGHTS
Cycle & Carriage: 2Q earnings double on insurance claim, dividend income
Tek Seng: Suspension of solar business won’t trigger PN17
CN Asia: Uplifted from PN17
Sime Darby Property: Upbeat on MVV project
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