By Chester Tay

KUALA LUMPUR--Shares of Telekom Malaysia Bhd. are higher in early trade after the group reported stronger net profit for the first quarter, thanks to lower finance costs and narrower foreign exchange losses.

The telecommunication group's stock climbed as much as 5.9%, narrowing year-to-date losses to about 9.6%. The stock pared some gains at the time of writing to trade 5.7% higher at MYR4.98.

Telekom Malaysia reported Wednesday that first-quarter net profit grew 4.4% on year to 339.8 million ringgit ($77.3 million), on the back of a 2.9% growth in revenue to MYR2.89 billion. Telekom Malaysia's management said the group is on track to achieve its 2022 market guidance based on its current performance momentum.

The first-quarter results indicate that the group is off to a "strong start," judging from its decent revenue growth and good execution of cost-saving initiatives, CGS-CIMB analyst Foong Choong Chen said in a note.

"This is a strong set of results that puts Telekom Malaysia well on track to meet, if not exceed, our 2022 estimate," he said.

The analyst keeps an add rating, but lowers his target price to MYR6.75 from MYR7.50 to factor in a higher risk-free rate amid the recent rise in government bond yields.

Still, he said Telekom Malaysia remains his top pick in Malaysia's telecommunications sector due to an estimated healthy compounded annual growth rate of 12% for earnings per share and a decent dividend yield.


Write to Chester Tay at chester.tay@wsj.com


(END) Dow Jones Newswires

05-25-22 2301ET