Maxis’s 1QFY24 core profit of RM353mn came in within expectations, accounting for 23.7% and 26.3% of our and consensus full-year estimates.
A 1st interim dividend of 4.0sen/share was declared, maintaining the same amount declared in the corresponding period last year.
YoY, 1QFY24’s service revenue grew by 3.7% to RM2,191mn, mainly driven by consumer (+3.3% YoY) and enterprise (+6.0% YoY) businesses. The growth of consumer business was underpinned by postpaid and home connectivity segments. The postpaid revenue jumped by 5.4% to RM911mn, thanks to higher subscriptions after introducing a broader range of postpaid plans to cater to a wider target market. Meanwhile, the home connectivity also saw the revenue jump 9.9% to RM244mn, driven by increased home connection customers with a higher blended ARPU of RM110.4 (+1.0% QoQ, +1.8% YoY).
As for the enterprise business, the revenue grew 6.0% to RM387mn, mainly on the back of 2G and 4G wholesale arrangements.
EBITDA jumped 7.4% to RM1,044mn, primarily driven by higher revenue and stricter cost management. Meanwhile, core profit increased 10.3% to RM353mn.
QoQ, 1QFY24 service revenue fell by 0.5% to RM2,191mn, while EBITDA dropped by 1.2% to RM1,044mn. The slowdown was partly due to seasonality.
Outlook
For FY24, management maintains the guidance for service revenue to grow by low single digits. Meanwhile, the CAPEX is expected to be less than RM1.0bn.
Overall, we expect the management to remain prudent on the dividend prospects, given that the uncertainties remain on the mechanics of the transition from Single Wholesale Network to Dual Wholesale Network.
Impact
Maintain our FY24 to FY26 earnings forecasts.
Valuation & Recommendation
No change to our target price of RM3.70, based on DCF valuation with a WACC of 8.3% and LT growth rate of 1.0%. Maintain a Sell call on the stock.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....