PETALING JAYA: Maxis Bhd
’s upcoming financial results for the fourth quarter ending Dec 31, 2024 (4Q24) are expected to be sequentially weaker, given higher device costs and subsidies with the launch of the iPhone 16, says UOB Kay Hian Research.
The telco’s stronger 3Q24 earnings were due to higher service revenue and a one-off manpower rationalisation cost undertaken in 3Q23. As for 2024 guidance, the research firm said the telco maintained its earnings before interest, taxes, depreciation, and amortisation (Ebitda) growth guidance of a “low single digit” growth.
Meanwhile, the group expects service revenue to grow by low single digit and capital expenditure to remain at less than RM1bil in 2024.
“We maintain a ‘buy’ call on Maxis with a target price of RM4.20. The stock trades at 8.7 times enterprise value over Ebitda, with a 4.5% dividend yield,” the research firm noted.Meanwhile, CGS International (CGSI) Research has upgraded Maxis from a “hold” to a “add” call as the 2.1% month-on-month decline in its share price provides a 14.1% 12-month total return, based on our RM3.90 target price.
It said Maxis’ 5% financial year 2025 dividend yield provides a healthy return, with a resolution of the 5G ownership issue potentially adding a re-rating catalyst.
“It appears to us that the second 5G network ownership issue is still unresolved.
“Without providing details, Maxis’ management stated that it is engaging with the regulators and other telcos on future steps.
“In our view, the merger scenario (with U Mobile Sdn Bhd, which won the bid to spearhead the second 5G network) could be a viable option, subject to stakeholders agreeing to price, shareholding structure, and post-merger dividends.,” said CGSI Research.
The research firm noted that the Communications Minister in a briefing on Nov 8 said that there was no need to review U Mobile’s appointment as implementor of the second 5G network.
However, some brokerage firms such as Hong Leong Investment Bank Research kept their “hold” rating as the telco’s decision on 5G strategy, which may impact dividend, poses a near term uncertainty.
