Kenanga maintains ‘market perform’ on Maxis

KUALA LUMPUR: While core earnings met expectations in 1HFY21, Maxis Bhd remains weighed down on a lack of differentiation among consumers in the 5G space as well as downward pressure on average revenue per user (ARPU).

“As Maxis has long differentiated itself with its premium brand and superior network, we think the market is still worried about the erosion of this differentiation among consumers when all telcos share access to the same 5G


“While the telcos will rely on 5G enterprise solutions for differentiation, we don’t foresee that to yield any meaningful results in the near future,” said Kenanga Research in its post-earnings note.

Meanwhile, the research house noted that Maxis continues to gain postpaid subs from its converged offerings but entry plans are diluting ARPU.

In the first half of the year, Maxis’ postpaid subscribers rose 6% to offet a 5% drop in ARPU.

Prepaid revenue fell 2% as a 4% drop in ARPU outweighed the 1% rise in prepaid subs.

Enterprise revenue rose 5%, likely on higher enterprise spending on digital channels. Home fibre revenue rose an impressive 23%.

Maxis’ 2QFY21 core net profit of RM371mil met expectations after bringing 1HFY21 to 50% and 49% of Kenanga’s and consensus full-year estimates.

The dividend per share of four sen brought 1HFY21 payout to eight sen, which as in line with Kenanga’s FY21 forecast dividend of 16 sen per share.

Post-results, Kenanga maintained its “market perform” recommendation but lowered FY22 forecast revenue and core net profit by 2% each as it lowered its prepaid assumptions on continued competition from the non-Big 3 telcos.

Concomitantly, the research house’s target price was reduced to RM4.55 from RM4.70 previously.