PETALING JAYA: Maxis Bhd
is expected to continue delivering resilient earnings growth this year, underpinned by stable mobile pricing, stronger enterprise contributions and disciplined cost management.
Hong Leong Investment Bank (HLIB) Research maintained its “buy” call on the telecommunications giant with an unchanged target price of RM4.45, saying the stock’s valuation remained “undemanding” at 15.9 times financial year 2027 (FY27) price-earnings ratio, alongside an attractive 5% net dividend yield.
The research house said Maxis’ first-quarter net profit of RM417mil came in within expectations, accounting for 25% to 26% of full-year forecasts.
Despite a softer quarter-on-quarter showing due to seasonal trends, the company still posted a 5% year-on-year (y-o-y) increase in earnings, supported by resilient consumer operations and continued enterprise expansion.
HLIB Research noted that service revenue rose 3.3% y-o-y to RM2.24bil in the first quarter, driven by continued growth in enterprise (5.3%) and resilient consumer business (2.8%).
Earnings before interest, taxes, depreciation and amortisation (Ebitda) expanded 4.2% y-o-y, while net profit margin improved to 15.3% from 14.2% previously.
The brokerage said Maxis’ enterprise business remained a key growth pillar, benefitting from stronger wholesale services and higher project deliveries for fixed and solutions segments.
Meanwhile, its postpaid segment continued to demonstrate resilience, with subscriber numbers rising by 57,000 quarter-on-quarter to 4.21 million.
However, average revenue per user (Arpu) moderated slightly as roaming revenue normalised following the year-end travel season. Prepaid subscribers also declined amid ongoing competition in the segment.
Management said competition in the prepaid market had turned “more rational”, with operators raising entry-level plan prices over the past one to two quarters.
In postpaid, pricing remained broadly stable across the industry, although U Mobile had increased data quotas significantly for its entry-level plans.
HLIB Research said Maxis is expected to start recognising equity-accounted losses from its stake in Digital Nasional Bhd (DNB) by the end of the third quarter or fourth quarter of 2026 once all conditions precedent for the stake transfer are fulfilled.
Nevertheless, management does not expect a material increase in 5G wholesale costs this year. The research house added that Maxis’ FY26 guidance remained intact, with management targeting low single-digit growth in service revenue and Ebitda, while capital expenditure intensity is expected to stay within 10% to 12%.
HLIB Research’s own forecasts project service revenue and Ebitda growth of 2.1% and 3.3%, respectively.
It believes improving clarity on Malaysia’s long-term 5G industry structure could help narrow valuation discounts across the telecommunications sector.
Within the sector, it continues to favour Maxis, given its resilient postpaid momentum and disciplined cost management.
Similarly, TA Research has maintained its “buy” recommendation with a target price of RM4.37, citing the group’s resilient earnings profile and healthy margin expansion.
The brokerage said Maxis’ first-quarter service revenue growth was mainly driven by gains in both the consumer and enterprise businesses.
TA Research also highlighted that the acquisition of a 33.3% stake in DNB is likely to be completed by end-third quarter 2026, after which Maxis will account for the investment using the equity method.
However, an analyst told StarBiz that Maxis’ prospects going forward may face headwinds from a high base effect and possible margin compression as more 4G traffic shifts to DNB’s 5G network.
He believes Maxis’ comparatively smaller subscriber base may constrain its ability to benefit from economies of scale in managing fixed costs such as spectrum, access fees and network expenses.
As a result, the group could be more exposed to rising costs as the industry moves towards a new 5G framework.
