News   Maxis has announced the appointment of Johan Dennelind as its new Chief Executive Officer (CEO) effective from 1 July 2013. He will be reporting to the Chairman of the Board and be appointed to the Board as an Executive Director. 

 Johan is a member of Vodafone's CEO senior Leadership Team and is currently CEO of Vodacom International. He is, meanwhile, overseeing all Vodacom's sub-Saharan activities outside South Africa, which serves some 20.0m customers.

 Johan used to work at Digi.Com Berhad, Malaysia for six years, where he was appointed to several key management positions during his tenure there. He was first appointed Chief Financial Officer (CFO) in 2004 and later as Chief Marketing Officer (CMO) followed by the CEO position in 2008. He resigned as Digi's CEO on 17 May 2010. During his six-year tenure, Digi went on to establish a significant market presence and emerged as one of the leading telecommunications companies in Malaysia.      

 Sandip Das, the current Maxis' CEO, will remain on the Board as a Non-Executive Director. 

Comments   We welcome the appointment of Johan Dennelind as Maxis' new CEO. We believe he will be able to lead the company into a new business direction and potential regain its market share in view of his vast experiences in Malaysia's telecommunication industry. 

Outlook   Maxis remains as a solid high-yield  play given its firm 40.0 sen DPS in the next 1-2 years. 

 However, potential margin erosions are expected as a result of the aggressive rollout of its Home Fibre plan and handset subsidy.  

  

Forecast  There are no changes in our FY12-FY14 earnings forecasts. 

Rating   Maintain MARKET PERFORM

 The company's current strategy of focusing on customers retention instead of maintaining its margin may add pressure to its near term financial performance. 

Valuation   We are maintaining our Target Price at RM7.00 based on a targeted FY13 EV/forward EBITDA of 13.1x (+2SD). 

Risks   Higher than expected margin pressure. 

 Continued losses in its market share to its peers.

Source: Kenanga