Friday, November 25, 2011

Telekom falls on decline in earnings

KUALA LUMPUR (Nov 25): TELEKOM MALAYSIA BHD [] shares fell on Friday after the company reported a 31% decline in its net profit to RM302.12 million from RM438.49 million a year ago due to unrealised foreign exchange loss on borrowings.

At 9.25am, Telekom was down 10 sen to RM4.34 with 98,100 shares traded.

It said on Thursday that forex translation losses were RM122.50 million compared with forex translation gains of RM139 million a year ago.

MIDF Research downgraded the stock to Neutral and said it was tweaking downwards its ''FY11 and FY12 earnings by 8.6% and 8.4% respectively, taking into account of the lower forex gain.

The research house in a note Friday said that as expected, there was no dividend for the quarter.

'However, we are estimating a 6.3% dividend yield for FY11. ''We continue to like TM for its defensive capabilities.

'But due to the recent spike in its share price, we have downgraded our recommendation to Neutral. Our target price is RM4.45 based on DDM, with a WACC of 9.3%,' it said.

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