• Maintain NEUTRAL, with new DCF-derivedMYR3.92 TPfrom MYR3.86, 10% upside and c.5% FY25F yield. Maxis’ results were broadly in line, with the good operational showing masking extended uncertainties on the 5G front where the situation remains fluid. We see share price downside supported by the commendable dividend yield. Investors should accumulate on weakness.

• Broadly in line; seasonally higher device cost in 4Q24. 3Q24 core earnings of MYR366m (+3% QoQ, +6.4% YoY) brought 9M24 core earnings to MYR1.07bn (+8.3%), at 77% of our and consensus forecasts. With cumulative EBITDA at 76%, the slight deviation against our numbers were on account of the lowerthan-expected tax expense, with the quarter also associated with weaker device sales. Management has retained its headline guidance with an expected quarterly DPS of 4 sen declared (YTD: 12 sen), reflecting a DPR of 86%.

• Operational numbers holding up; capex undershooting. 3Q24 EBITDA reached another quarterly high, up 13% YoY (YTD: +8.1%). This is off the high base of staff rationalisation cost booked in 3Q23 and good opex restraint. Mobile revenue growth (9M24: +3.2% YoY) continues to be driven by pre-topost migration with industry-leading postpaid revenue and subs growth. YTD capex of MYR362m only makes up a third of FY23 spending with targeted investments. Meanwhile, enterprise revenue eased QoQ with lumpy project recognition in the previous quarter. The intensified competition in the fibre broadband (FBB) market contributed to the flattish fibre revenue with the deceleration in fibre subs-adds QoQ. Given the ongoing competitive dynamics, Maxis’ go-to-market approach will continue to focus on delivering strong value propositions with a “positive discounting” approach undertaken.

• Bidding for multiple data centre (DC) connectivity deals. Maxis believes it is well positioned to capture the expanding DC connectivity business – discussions are ongoing with DC operators and/or hyperscalers. The size of such deals could range from tens to the hundreds of millions of MYR, depending on the capacity with a multi-year contract typically entered into.

• Discussions on 5G options ongoing; comments premature. As expected, management remain tight-lipped on potential options, following the unexpected outcome last week with discussions ongoing with stakeholders.

• Forecasts lifted as with risk premium on the stock. We lift FY24F-26F by 4- 12%, mainly to factor in lower capex and effective tax rate, and adjustments to wholesale cost assumptions (wholesale cost remains under MYR50m per quarter). We also increase the valuation risk premium on the stock slightly to account for the extended uncertainty on the second 5G network. Major upside/downside risks for the stock are competition, weaker/stronger-thanexpected earnings and regulatory developments. A 2% ESG premium is baked into our TP, based on our internal score of 3.1.

Source: RHB Securities Research - 11 Nov 2024