Analysts retained their earnings forecasts on TM despite MFL’s legal threat against the group. — Reuters photo
KUCHING: Analysts retained their earnings forecasts on Telekom Malaysia Bhd (TM) despite Malaysian Football League LLP’s (MFL) legal threat against the group.
In a filing on Bursa Malaysia last week, TM announced that the group had received a Writ of Summons and Statement of Claim dated March 18, 2019 from MFL seeking for a number of reliefs from TM.
“The Claim is not expected to have any operational impact to TM Group. The financial impact, if any, cannot be ascertained at this juncture as it will depend on the outcome of the legal proceedings of the Claim.
“TM has instructed its solicitors to take the necessary steps to defend the Claim,” the group said.
According to AmInvestment Bank Bhd (AmInvestment Bank), MFL announced last week that it is ending the sponsorship contract with TM worth RM480 million after reaching a unanimous decision at a board meeting in Johor Bahru.
“TM responded that the group is no longer MFL’s sponsor from 2019 onwards, but denied MFL’s claim that it had failed to meet its obligations in the contract between the two parties,” AmInvestment Bank said.
The research firm also noted that TM’s Unifi brand was signed in February last year as the title sponsor for the Super League and Malaysia Cup for an eight-year partnership deal worth RM480 million until 2025.
“TM has not made any provisions for this claim and we expect it to be categorised under contingent liability as this could be a protracted legal case.
“Hence, we have not revised our earnings forecasts for now,” the research firm said.
The research firm’s financial year 2019 forecast (FY19F), FY20F and FY21F core net profit for TM remained at RM627.3 million, RM653.3 million and RM678.2 million respectively.
All in, AmInvestment Bank maintained its ‘hold’ call on TM with an unchanged discounted cash flow (DCF)-based fair value of RM2.95 per share, based on a weighted average cost of capital (WACC) of 8.6 per cent and zero terminal growth rate.