• Maintain HOLD (TP: RM3.95). Maxis’s top-line grew by +4.0% YoY, supported by better contribution from service revenue (+4.2% YoY). Note that consumer business achieved revenue growth of 3.7% YoY, surpassing the RM7bn mark, driven by the rapid deployment of 5G and the introduction of new high-speed fiber plans. The group recorded net profit of RM992mn (-13.8 YoY). Nonetheless after stripping out a few exceptional items including a one-off gain of RM361mn from (i) cost optimisation in 3Q23, (ii) tax settlement and (iii) non-cash adjustments in 4Q23, Maxis recorded core earnings of RM1,353mn (+3.0% YoY). The group’s bottomline was in-line with ours and consensus expectations, accounting for 105% and 104% respectively. The group declared a fourth interim dividend of 4.0 sen per ordinary share, bringing cumulative FY23 DPS to 16.0 sen (20.0sen in FY22). Maintain a HOLD call with an unchanged TP of RM3.95. Our valuation is derived based on DCF valuation with a WACC of 8.0% and a long-term growth of 1.0%.

• Key highlights. In 4QFY23, Maxis’s revenue grew by +7.4% YoY, attributed to higher service revenue, which increased by 4.2% YoY. In tandem, the group’s core net profit edged up by +3.0% YoY. Postpaid revenue rose by 6.2% YoY supported by the growth in postpaid subscriber (+7.6%).

• Earnings Revision. No change to our forecast.

• Outlook. In the upcoming period, we foresee an increase in capital expenditure attributable to investments in 5G infrastructure and associated products. Regarding the prepaid segment, despite subdued revenue growth in the current quarter, we anticipate prepaid revenue to improve in FY24, in line with expectations of higher tourism numbers and the weakening of the MYR, which will likely attract more tourists. Aside from that, the management’s guided FY24 KPIs include: (i) low-single-digit revenue growth, (ii) EBITDA remain at the same level as in 2022, and (iii) a capex of less than RM1bn.

Source: BIMB Securities Research - 23 Feb 2024