News    Maxis announced the appointment of Morten Lundal as its new Chief Executive Officer (CEO) to take office on 1 October 2013. He will be reporting to the Chairman of the Board and be appointed to the Board as an Executive Director.

Morten is presently Group Chief Commercial Officer of Vodafone Group plc. Prior to assume this position in 2010, Morten was Regional CEO responsible for 8 operating companies in Central Europe and Africa. He joined Vodafone from Digi Malaysia in 2008. 

In 2004, Morten was appointed CEO of Digi Malaysia where he was instrumental in instituting various changes crucial to Digi Malaysia’s transformation and growth. Under his leadership, Digi Malaysia’s mobile revenue market share, earnings and share price increased significantly. 

Morten joined Nordic mobile operator Telenor in 1997 and held several CEO positions, including for the Internet Division and Telenor Business Solutions as well as the position of Executive Vice President for Corporate Strategy. 

Comments    We welcome the appointment of Morten Lundal as Maxis’ CEO, in view of his vast experiences in Malaysia as well as the global telecommunication industry. Digi Malaysia has recorded a tremendous growth phase during his leadership from 2004-2008, where the group’s revenue and PAT surged by a CAGR of 121.2% and 137.7% to RM4.81b and RM1.14b, respectively.  

While we are keeping our FY13-FY14 earnings forecast unchanged, we believe the appointment of new CEO could provide some short-term trading opportunities given the elimination of the leadership uncertainty.    

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   Maintained our FY13-FY14 earnings forecasts. 

Rating   Maintain MARKET PERFORM

Valuation    We are maintaining our Target Price at RM6.94 based on an unchanged targeted FY14 EV/forward EBITDA of 12.6x (+1.0x SD). 

Risks    Higher than expected margin pressure. 

Continued losses in market share to its peers.

Source: Kenanga