Investment Highlights

• We maintain Maxis’ HOLD rating with an unchanged DCFderived fair value of RM5.10/share. This is based on a WACC discount rate of 6.3% and terminal growth rate assumption of 2%, which reflects a neutral ESG score of 3 stars. This also implies an FY20F EV/EBITDA of 12x and is on par with its 3- year average.

• Tan Sri Mokhzani Mahathir, a son of the former Prime Minister Tun Dr Mahathir Mohamed, will be redesignated as Maxis’ chairman of the board following Raja Tan Sri Arshad Raja Tun Uda’s decision to step down effective 22 April 2021, upon the conclusion of its AGM. Arshad, aged 74, has served as chairman since Maxis’ relisting in 2009.

• Mokhzani, aged 60, currently chairs Maxis’ audit and risk committee and is a member of the nomination and remuneration committees as well as the government and regulatory affairs committee. He will relinquish his roles as senior independent director and chairman of the audit and risk committee immediately after the AGM.

• After starting his professional career as an offshore engineer with Sarawak Shell, Mokhzani ventured into manufacturing, oil and gas services, finance and healthcare sectors.

• His past corporate experience included group CEO and executive chairman positions in Pantai Holdings, Goltron, THB Industries, Tongkah Holdings and Kencana Petroleum, which subsequently led to being co-founder and executive vice chairman of SapuraKencana Petroleum.

• He was also the chairman and chief executive officer of Opcom Holdings, a manufacturer of fibre optic cables and provider of engineering and installation services, up to 1 June 2019.

• Currently, his portfolio of investments via Kencana Capital S/B includes businesses in IT, property, agriculture and food industry and the automotive sector. Mokhzani is actively involved in motorsports having served as chairman of Sepang International Circuit S/B and president of Motorsports Association of Malaysia. Mokhzani graduated with a Bachelor of Science in Petroleum Engineering from University of Tulsa, Oklahoma in the U.S.

• We are positive on this development given Mokhzani’s extensive executive experience in multiple industries, including telecommunications. Additionally, as an existing independent director and chairman of the audit and risk committees, Mokhzani is familiar with the current management and culture of the group since 2009.

• Given the uncertain impact from the Covid-19 pandemic, management has refrained from providing any FY21F guidance. The stock’s FY21F EV/EBITDA of 12x is at its 3-year average while providing a fair dividend yield of 3%.

Source: AmInvest Research - 23 Mar 2021