Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: HWANGDBS

Maxis Bhd
(Dec 1, RM5.30)
Maintain hold at RM5.29 with target price of RM5.10: Revenue in 3Q10 inched up 1% quarter-on-quarter (q-o-q) mainly supported by 8% increase in the non-voice segment (37% of group revenue) to RM809 million, which helped to cushion the lower interconnect revenue. The non-voice segment was partly driven by the 36% q-o-q growth in the wireless broadband segment (to RM106 million) on the back of stable average revenue per user (ARPU) of RM70 and 17% growth in subscriber base (to 524,000). Mobile voice revenue dipped 3% q-o-q following the reduction in termination rates and 2% to 3% q-o-q decline in postpaid and prepaid ARPUs. During the quarter, Maxis' voice subscriber base grew 4% q-o-q to 13 million (478,000 net adds).

Earnings before interest, tax, depreciation and amortisation (Ebitda) margin expanded 4.4 percentage points q-o-q to 51.4% due to lower customer acquisition costs, that is subsidies and devices to secure customers and lower interconnect rates (started in July 2010). Sales and marketing costs also dropped 7% q-o-q following lower expenses incurred on World Cup 2010 promotions.

Maxis announced its third interim net dividend per share of eight sen which translates into 2% yield. Maintain hold with discounted cash flow-based target price of RM5.10 (8% WACC; 1% terminal growth). Net yield of 6.6% should lend support to its share price. ' HwangDBS Vickers Research, Dec 1


This article appeared in The Edge Financial Daily, December 2, 2010.