CIMB Equities Research has upgraded the Malaysian telecommunications sector from Underweight to Neutral
KUALA LUMPUR: Maybank IB Research is maintaining its Hold call on Maxis with an unchanged target price of RM6.60, following the release of the latter’s first quarterly results.
Maxis’ first quarter results for the period ended March 31, 2015, saw EBITDA and net profit in line with Maybank IB’s and consensus’ forecast.
Excluding a forex gain of RM65mil, Maxis’ first quarter core net profit of RM453mil was 27% and 24% of Maybank IB’s and consensus’ respective 2016 forecasts.
EBITDA of RM1.195bil was 26% of both Maybank IB’s and consensus’ 2016 forecasts. Service revenue declined marginally but this was offset by slight margin expansion. Maxis also announced a 5 sen dividend per share, within expectations.
While the first quarter was fairly routine for the telco, the real test comes in the second quarter.
“The real litmus test however lies in the second quarter, when the impact from the recent postpaid pricing debacle will show, and the quantum of spectrum fees be announced,” said Maybank IB.
Maxis lost further subscribers (-288,000 prepaid, -96,000 postpaid) in the quarter as it continued to maintain some degree of pricing discipline.
Prepaid ARPU were stable, while postpaid ARPU continued to stay high. However, the impact of Maxis’ recent postpaid pricing debacle will only begin to manifest in the second quarter.
Management alluded to postpaid churn having stabilised following the interim measures of raising data quotas to existing MaxisOne plans.
Maxis still expects to maintain absolute service revenue, EBITDA and capex for 2016.
Maybank IB keeps its earnings and target price for Maxis unchanged, not yet incorporating the still unknown incremental fees for the 900/1800MHz spectrum (announcement potentially in mid-2016).
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