by AZALEA AZUAR / pic source: time.com.my
TIME dotCom Bhd’s new data centre is expected to generate revenue for the company with space is no longer a constraint going forward.
Maybank Investment Bank Bhd (Maybank IB) analyst Tan Chi Wei expects a gestation period for a few years and the capital expenditure (capex) for repurposing and new-build is not insignificant.
The bank maintains ‘Hold’ recommendations on TIME with an unchanged target price (TP) of RM4.60.
“Our earnings forecasts and our RM4.60 TP (discounted cashflow-based assuming 6.8% weighted average cost of capital and 2% long-term growth) are unchanged,” Tan noted in a research report on TIME yesterday.
TIME recently purchased Bangunan KWSP for RM62 million in downtown Kuala Lumpur.
“We expect TIME to repurpose the office building into a data centre as the acquired building is located just a block away from Menara AIMS (TIME’s flagship and fully-occupied data centre) and would thus enjoy the same location appeal.
“It is also logistically convenient, both in terms of operations and infrastructure. Details (such as capacity) are scant for now, but we would expect incremental capex of a few hundred million over the next few years,” Maybank IB noted.
TIME had already started on the second phase of its second Cyberjaya data centre in late-2021, with management noting previously enquiries for the completed first phase had outstripped supply.
“We expect meaningful revenue contribution from the second Cyberjaya facility in 2022. The site is ultimately scalable to 50 megawatts, and there is thus ample scope for further growth,” the research outfit said.
TIME’s near term revenue growth will continue to be retail-driven, underpinned by ongoing fibre network expansion.
Data centre currently accounts for 20% of TIME’s revenue, boosted by the acquisition of AVM Cloud Sdn Bhd.
“Going forward, we expect the data centre’s share of revenue to grow to 25% by 2025,” said Maybank IB.