• Maintain HOLD (TP: RM3.90). Maxis’s top-line grew by +4.4% YoY in 9M24, supported by better contribution from service revenue (+3.9% YoY) as well as well as device revenue (+7.2% YoY). Note that consumer business achieved revenue growth of 3.3% YoY, driven by growth in both mobile and home connectivity. At the EBITDA level, Maxis achieved 8.1% YoY growth, supported by an increase in service revenue, lower staff costs, and higher Universal Service Provision programme (USP) income from project completions. Maxis recorded a net profit of RM1,075mn in 9MFY24, reflecting a 14.9% YoY increase. The group’s bottom-line performance was in line with both our expectations and consensus estimates, accounting for 80% and 77% of the full-year forecast respectively. The group declared a fourth interim dividend of 4.0sen per ordinary share, bringing the cumulative 9MFY24 DPS to 12.0sen, consistent with 9MFY23. We maintain HOLD, with a lower TP of RM3.90. Our valuation is based on a DCF model, applying a WACC of 8.0% and a long-term growth rate of 1.0%

• Key Highlights. On a quarterly basis, consumer postpaid revenue grew by 5.0% YoY in 3Q24, driven by a 7.5% increase in postpaid subscribers. However, prepaid revenue remained relatively stable, with a slight decrease of 1.7% YoY, aligning with a 3.1% YoY decline in ARPU. This is due to Maxis's strategy to broaden its pricing to target all market segments, which has resulted in some dilution. Enterprise business revenue up by 4.2%, primarily driven by the launch of 2G and 4G wholesale services.

• Earnings Revision. No change to our forecast.

• Outlook. With U Mobile selected to lead the second 5G network, the group has indicated it will review its options for the next steps. We believe this uncertainty regarding Maxis’s direction may limit the upside to share price. However, we remain optimistic about Maxis's ability to sustain resilient service revenue supported by initiatives to drive convergence between fixed and mobile services, as well as improvements in the enterprise segment. Additionally, the group remains committed to its FY24 KPIs and is on track to achieve (i) low single-digit revenue growth and (ii) marginal to low single-digit EBITDA growth

Source: BIMB Securities Research - 11 Nov 2024