AIMS disposal 'negative' for shareholders

NST Wed, Feb 15, 2023 08:14am - 1 year View Original


KUALA LUMPUR: A TOP shareholders group has warned that Time dotCom Bhd's sale of its data centre business for more than RM2 billion will diminish the long-term shareholder value for some of Malaysia's largest public funds.

Time shareholders are set to deliberate on the proposed disposal at an extraordinary general meeting today.

The Employees Provident Fund, Khazanah Nasional Bhd and the Retirement Fund Inc collectively hold a 37 per cent stake in Time. Time had on Nov 21 last year announced the divestment of its AIMS data centre business in Malaysia and Thailand to Digital Bridge Group Inc's unit, DB Arrow Pte Ltd, for slightly over RM2 billion.

Minority Shareholder Watch Group (MSWG) chief executive officer Devanesan Evanson said upon divestment of AIMS, Time would deconsolidate the high growth data centre segment.

Hence, it would lose the opportunity to realise future share price gains from the growth of the data centre segment and increase its share of contribution to a well diversified revenue and net profit portfolio mix.

"The data centre segment is a key beneficiary of data explosion globally. Data centre demand in the Asean region is expected to see sustained growth of about 15 per annum during this decade."

The Minority Shareholder Watch Group (MSWG) chief executive officer Devanesan Evanson has made this warning as
The Minority Shareholder Watch Group (MSWG) chief executive officer Devanesan Evanson has made this warning as

He pointed that AIMS Group's revenue, gross profit and net profit had grown by 18, 14 and 15 per cent, respectively, in its financial years 2020-2021.

The data centre segment also contributed 13 per cent of revenue and 9.5 per cent of net profit during Time's financial year 2021.

Time reported earnings before interest, taxes, depreciation and amortisation (Ebitda) of RM689 million for its financial year 2021, said Devanesan, adding that this implied a leverage capacity of RM2.76 billion.

As at Sept 30 last year, Time had net positive balance sheet, with cash reserves of RM408 million and borrowings of RM127 million.

"Time can leverage its balance sheet to pay dividends to shareholders," he remarked.

The company could also undertake organic and inorganic expansion of its data centre
business in the Asean region
(including the option to undertake partnerships and joint ventures with global data centre players) without divesting AIMS and deconsolidating its high growth data centre assets, he added.

"Time share price will trade at lower PE (price-earnings) ratio and Ebitda multiples post-divestment of AIMS, reflecting a low growth fibre-only business as opposed to the present higher growth fibre plus data centre business," Devanesan added.

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