• Maintain HOLD (TP: RM3.95). Maxis’s top-line grew by +3.0% YoY, supported by better contribution from service revenue (+3.7% YoY). Note that consumer business achieved revenue growth of 3.7% YoY, driven by Maxis's strategy to expand the price range of its postpaid plans resulted in a 5.4% increase in postpaid revenue, supported by a 7.5% growth in postpaid subscriptions. Maxis recorded net profit of RM353mn (+10.3 YoY). The group’s bottom-line was in-line with ours and consensus expectations, accounting for 26.1% and 26.3% respectively. The group declared a first interim dividend of 4.0 sen per ordinary share, unchanged from 4.0 sen in 1QFY23. Maintain a HOLD call with an unchanged TP of RM3.95. Our valuation is derived based on DCF valuation with a WACC of 8.0% and a long-term growth of 1.0%.
   
• Key highlights. In 1QFY24, consumer postpaid revenue grew by +0.9% YoY and +5.4% QoQ as the group catering to all market segments with its extensive range of postpaid plans (including diverse pricing options and devices), and an effective pre-to-post migration strategy. ARPU however, down slightly to RM75.10 (from RM78.40 in 1Q23) due to the lower roaming revenue. Prepaid revenue declined by -0.9% YoY and -1.8% QoQ due to fewer days in the first quarter, as prepaid revenue is recognised when services are rendered.
   
• Earnings Revision. No change to our forecast.
   
• Outlook. In regards with 5G development, Maxis guided that the process is still underway, as previously communicated. The discussion on the 5G dual network transition is ongoing, and whether the decision will be finalised by 3Q24 depends on the pace of the ongoing due diligence process and government actions. We are positive on Maxis’s capability to uphold service revenue resilience, supported by its pre-to-post migration strategy as well as ongoing initiatives to encourage convergence between fixed and mobile services. Aside from that, the management’s guided FY24 KPIs include: (i) low-single-digit revenue growth, (ii) EBITDA remain at the same level as in 2023, and (iii) a capex of less than RM1bn.

Source: BIMB Securities Research - 20 May 2024