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KUALA LUMPUR: MIDF Research has raised its FY19 earnings estimates for Maxis Bhd
by 3.4% as it factors in higher earnings contribution from the home fibre and enterprise segments.
The research house said on Friday that it however, fine-tuned its FY18 earnings estimate lower by 0.6% on a slightly more conservative Ebitda margin to account for higher staff and resources and marketing expenses.
While Maxis is still on the lookout for a new CEO, the company has hired a new group of management to ensure that it is business as usual.
They include Gokhan Ogut (COO), Wayne Treeby (CFO), Paul McManus (Head of Enterprise Business) and Rob Sewell (Head of strategy), all of whom were previously attached with well-known telco operators such as Vodafone and Telstra.
The research house raised its target price in line with its FY19 earnings adjustment, to RM5.96 from RM5.80 previously.
It noted that Maxis has shown sequential improvement in its Q2’18 quarterly results, supported by recovery in mobile revenue and better home fiber service revenue as well as effective cost management in the areas of procurement, capex and opex spending.
“Note that the recently appointed COO, Gokhan Ogut, has initiated a company-wide effort to embed cost optimisation throughout the company so it becomes a conscious effort by all employees,” it said.
MIDF Research said this was expected to defend Maxis’ Ebitda margin at around 50% of service revenue.
“However, we still expect FY18 earnings to trend lower due to progressive termination of 3G network services with Umobile.
“Moving forward, the company’s emphasis on growing the home fibre and enterprise segment could help to partially make up for the competitive mobile segment,” it said.
It also expects the Maxis’ dividend yield to remain below 4% to meet its capital commitment.
Given the lack of significant positive rerating catalysts, it kept its Neutral recommendation on Maxis.
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