Maxis markedly improved its 4G coverage to 55% in 3Q15 (2Q15: 41%, 1Q15: 39%), reasserting its widest 4G network claim over its peers.
KUALA LUMPUR: CIMB Equities Research is maintaining its Hold with discounted cash flow based target price of RM6.70.
It said on Thursday it raised its FY15-16 capex assumptions, resulting in 1%-2% cut in its FY15-17 core EPS and 10.1%/4.4% lower dividend per share (DPS) for FY15/FY16.
“Due to the small earnings revision, we maintain our DCF-based target price at RM6.70 (WACC: 7.0%) and Hold rating. We believe Maxis is least likely to be impacted by more intense prepaid competition as it is gaining market share. Dividend yields remained decent at 3.5%-4.5%.
“We prefer Axiata for Malaysian telcos. Our top picks for Asean telcos are Indosat, XL and AIS,” it said.
CIMB Research said Maxis’ 3Q15 normalised EBITDA was largely flat on-quarter (+7.3% on-year), with higher revenue offset by lower margin. Excluding unrealised forex losses, core net profit rose 3.5% on-quarter (+9.0%, adjusted for reversal of staff bonus provision).
Overall, Maxis’ EBITDA/core net profit were largely in line with expectations, with 9M15 at 77%/74% of its FY15 estimates (consensus: 77%/77%).
The research house pointed out Maxis’ mobile service revenue (ex-RAN sharing) grew 3.0% on-quarter (+4.5% on-year), driven by prepaid (+6.0% on-quarter, +8.4% on-year) which continues to see traction in the migrant segment.
Prepaid ARPU rose 8.3% on-quarter (-2.5% on-year due to rising data usage, rotational churn of low-value users and removal of GST freebies.
Postpaid revenue was flat on-quarter (+1.2% on-year), with 1.0% ARPU gains offsetting 0.4% decline in subs. This was despite MaxisOne user base rising 80,000 on-quarter to 514,000, 18.5% (2Q15: 15.5%) of its revenue-generating base.
Maxis’ EBITDA margin fell 1.3 percentage points on-quarter (+1.2 percentage points on-year) but still remained high at 51.3%. This was largely caused by higher international traffic cost due to the weaker RM vs. US$, and higher IDD traffic given Maxis’s big push into the migrant workers segment.
Excluding the forex impact, we estimate EBITDA margin was largely steady on-quarter (+2.3 percentage points on-year) at 52.4%.
Maxis markedly improved its 4G coverage to 55% in 3Q15 (2Q15: 41%, 1Q15: 39%), reasserting its widest 4G network claim over its peers.
The telco’s network modernisation is now 83% complete (2Q15: 81%). In line with the accelerated network rollout, Maxis ramped up capex to RM359mil in 3Q15 (1Q15: RM146mil, 2Q15: RM260mil)and increased its FY15 capex guidance to RM1.2bil to RM1.3bil (previous: RM1.1bil).
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