PETALING JAYA: Maxis Bhd
’s third-quarter (3Q) and cumulative results for the nine months of financial year 2022 (FY22) came in within market expectations.
Kenanga Research said the telecommunication group’s subscribers, in both the prepaid and postpaid segments, and business-to-business (B2B) revenue remained robust, while home connections continued to show positive momentum with average revenue per user looking stable.
According to the research firm, the telco maintained its “FY22 guidance for a mid-to-single-digit increase in service revenue with stable earnings before interest, taxes, depreciation and amortisation (Ebitda) margin”.
However, Kenanga said that while it was keeping its FY22 forecast numbers for Maxis, it was cutting the FY23 forecast earnings of the telco by 13% to factor in 5G leasing charges.
That said, the research firm has raised its target price on Maxis by 5% to RM4.07 to “reflect the 5G rollout risk that has now effectively been crystalised”.
Maxis reported a lower net profit in 3Q at RM315mil, which was down 3.1% from a year earlier due to the one-off prosperity tax for the year.
Quarterly revenue was up 6% to RM2.41bil.
Analysts noted that revenue for the nine-month period improved 7% underpinned by the better performance from service revenue.
However, Ebitda was flat on account of higher device costs.
Maxis expects the commercial launch of its 5G plans and the announcement of pricing by January 2023. In the meantime, the telco is offering the largest selection of 5G devices to the market.
The research firm noted that Maxis 5G Alliance, an initiative to create “a leading 5G ecosystem platform in Malaysia”, was gaining momentum with the signing on of seven new partners, including Gamuda Land, Nokia, ZTE and Garuda Robotic, bringing the total to 23.
“We believe this will greatly boost its B2B revenue and fast-track its 5G deployment, as this alliance focuses on commercialising 5G and the Internet of Things,” it said in a report yesterday.
The telco also does not expect rising inflation to stunt its growth and will continue to introduce products appealing to low-income consumers, who are most vulnerable to high inflation.
Kenanga has an “outperform” call on the stock but other research firms were less bullish.
MIDF Research was “neutral”, while CGS-CIMB Research and UOB Kay Hian (UOBKH) Research have “hold” calls on the telco.
UOBKH deemed Maxis’ current valuation fair when stacked against regional peers, taking into consideration that a 5G single wholesale network will introduce more competition for the sector.
TA Research, meanwhile, maintained a “sell” call on the telco with a RM3.80 target price. However, the research firm noted the telco has continued to sustain dividends at pre-pandemic levels of five sen for the fourth consecutive quarter versus the lower quantum of four sen from the onset of the pandemic in 1Q of FY20 up to 3Q of FY21.
