MIDF Research maintains 'neutral' on Maxis

KUALA LUMPUR: MIDF Research has maintained its ‘neutral’ call on Maxis Bhd with a target price of RM4.50 following the completion of the latter’s largest acquisition.

“Our target price is derived by pegging FY22 EPS of 16.0 sen against PER of 28x, which represents a slight premium over the company’s 2-year average rolling PER of 25.2x.

“We maintain our neutral outlook on Maxis due to intense mobile competition and tepid revenue growth prospects,” MIDF said in a report Monday.

Maxis has completed the acquisition of managed network and security services company MyKRIS Asia Sdn Bhd for up to RM157.5mil, which would be the telecommunications company’s largest acquisition to date.

It said the completed acquisition strengthened Maxis’ position as the leading converged solutions provider in Malaysia by enhancing Maxis’ Managed Services capability which is the important bridgehead linking Maxis’ best-in-class mobile and fibre network connectivity with broader solutions including cloud services and digital solutions.

“The acquisition price is fair as the acquisition price translates into PER of 17.5x, which is lower than PER of Maxis at 27.0x, given the smaller size of MyKRIS.

“We expect the funding requirement of RM157.5mil leaves a marginal impact on Maxis as Maxis has a cash pile of RM1.2bil in 3QFY21,” MIDF said.

Nonetheless, MIDF said the net gearing of Maxis was expected to increase to 1.29x from 1.27x post the acquisition.

Meanwhile, earnings contribution from the acquisition is expected to be negligible on Maxis earnings.

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Maxis , MIDF , MyKRIS Asia


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