Maxis Berhad - Results still within expectation
Mon, 11-Nov-2024 07:19 am
by Steven Chong • Apex Research

Counter

MAXIS (6012)

Target Price (RM)

4.30

Recommendation

Buy

Summary

  • Maxis recorded CNP of RM375.0m (+8.4% yoy, +2.7% qoq) in 3QFY24, bringing 9MFY24 CNP to RM1.1bn (+9.1% yoy), which was in-line with ours and consensus’ expectations, accounting for 77% and 78% of forecasts respectively.

  • Kept our earnings forecast unchanged for FY24-26 as we foresee softer earnings in 4QFY24 due to higher subsidy costs in tandem with the seasonal increase in device sales.

  • Re-iterate our BUY recommendation with TP of RM4.30, based on DCF valuation (WACC of 6.6% with a long-term growth rate of 0.5%).

     

Results Review

  • Results review. 3QFY24 core net profit stood at RM375m (+8.4% yoy, +2.7% qoq). The notable yoy performance was attributed to lower staff cost as a result of Maxis’s optimisation efforts last year. Revenue for the quarter rose to RM2.6bn (+5.5% yoy, -0.4% qoq), supported by growth from both service revenue and device sales.

  • Results within expectation. 9MFY24 core net profit of RM1.1bn makes up to 77% and 78% of both our and consensus forecasted net profit, which was within expectations.

  • Operations Highlights. In 3Q24, total mobile subscribers grew to 9.6m (+3.8% yoy, +0.3% qoq) led by resilient growth in postpaid customer base. Meanwhile, both postpaid (-4.3% yoy, -1.2% qoq) and prepaid (-3.1% yoy, -0.5% qoq) ARPU remained under pressure due to tougher competition within the consumer mobile market. Home Fibre also displayed robust growth in subscription to 698k (+8.2% yoy, +1.2% qoq), while ARPU slightly taper off to RM109 (-0.5% yoy, -1.2% qoq) in view of the growing adoption of Maxis bundled deals.

  • Industry Highlights. There have been no further updates regarding Maxis's future plans following the announcement of the winner for the second 5G network by MCMC. While the Group has remained muted on its available options, we reckon Maxis is required to incur c.RM360m annually on 5G access fees under the current agreement with DNB.

  • Declared dividend of 4 sen per share. We expect another dividend of 4 sen per share to be declared in next quarter. As such, total dividend for FY24 could end up at 16 sen per share, which translates into a dividend yield of 4.5% based on current share price of RM3.57.

  • Valuation. We re-iterate our BUY recommendation with an unchanged target price of RM4.30 based on DCF valuation (WACC of 6.6% with a long-term growth rate of 0.5%).

  • Risk. Price slashing by competitors. Changes in government regulations. Higher-than-expected 5G capex affecting cashflow and dividend. 

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The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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