Hi people,

I have been studying Time dotcom for few months and notice the company is successfully turn around since 2009.

I believe TDC is a very good company and managed by very capable management.

Here is my points:

1. The company suffered years of loss from it operation in Timecel business (Public Phone) which already extinct now.

New management made a bold decision to cut loss and put in new strategy.

2. Continue from point 1, management is playing to its strength by not jump straight into mobile internet business that is up against the BIG 3 in market (Maxis, Digi & Telcom)
and Fix Broadband competitor - TM.

Instead, they have been developing sub marine cable that cater for massive broadband demand for years to come.
Imagine, now almost everyone - kid, adult and old folks are relying on internet in daily life. People stream movies online instead of using DVD player, whatsapp to communicate
instead of SMS/call, listen to online music/radio instead of using traditional radio; online studies etc.
More importantly, demand for broadband will continue to surge as Gen Y ~ Z are more IT savvy than ever and will ask for better quality of life.

3. Cater for huge demand for Corporate

Decade ago, most companies use email for communication or call each other across the globe with phone. Today, many MNCs are transforming with IT evolution.
Example, IBM is using VOIP (Voice over Internet Protocol) to make call internationally. You can see fewer phone on their desks as they use software installed on the PC to make calls which
could save them billions of dollar in long term. And, this is more mobile as MNCs now day allow their staff to work from home.

On top of that, staff in one country will present ideas to counter in another country, which requires strong and stable broadband connection for video conference.
Also, businesses today are very concern about information warehouse to store huge volume of data. Business leaders are trying to harness power of data to provide useful information
for decision making (Big data, Internet of Things and business analytic).

Personally, i think TDC is different from current mobile broadband players in the market where they keep spending money to upgrade facility and lower product price to gain market share. I would think, how long they can afford to do this? How low the price can go down? And, from business perspective, who will win eventually? I don't know.

So, TDC is in the right position as it separate itself from the intense competition by providing broadband infrastructure to ISP like Maxis, Celcom & Digi.

However, I also believe currently the market is overpaying for TDC share. As of yesterday, TDC is priced @ RM7.03.

Current EPS = RM0.3 with Revenue $ 600m. PE = 20
Lets say, we assume a moderate PE = 15, we should pay RM 4.50 per share (RM0.3 x 15)

If PE = 20, price = RM6. (RM0.3 x 20)
*This is simple calculation in Warrent Buffet valuation method.

Compared to Maxis: EPS RM0.22 & Revenue $8.4b, Price = RM 6.4; PE = 29.

As you can see, Maxis revenue is more than 10x of TDC and has long standing/proven record. Now, TDC is already commanding higher share price than Maxis.
HLB Research

And I believe price will go up further. Why? See attachment.
There are more demand queuing @ RM7 and queue @ RM7.10 for sales. Not to forgot, TDC just announce special dividend.

What do you think?




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