MAXIS: Strong Earnings Driven by Cost Efficiencies, Positive Outlook Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading telecommunications company concluded a robust 2025, delivering earnings that surpassed market expectations, primarily propelled by stringent cost management. The positive momentum is anticipated to extend into 2026, supported by management’s optimistic guidance for growth.
Performance Review
For the financial year 2025, the company reported a significant 12% year-on-year increase in earnings, reaching RM1.6 billion. This performance was largely in line with, and in some cases exceeded, both the investment bank’s and consensus forecasts (102% and 101% respectively). Despite a flattish service revenue of RM8.9 billion year-on-year, the company’s diligent cost discipline was a key driver, bolstering net profit (Pat) margins by 1.4 percentage points year-on-year to 14.7%. Operational efficiencies were observed across various segments, including a 1% year-on-year reduction in traffic, commissions, and other direct costs, an 8% decrease in staff and resource costs, and a 3% decline in operation and maintenance expenses.
Balance Sheet and Dividends
The company also demonstrated a strengthening financial position, with its net debt-to-EBITDA ratio improving from 2.14x in 2024 to 1.97x in 2025. Free cash flow saw a healthy 9% year-on-year increase, reaching RM2.6 billion. This robust cash generation supported higher dividend payouts, with full-year dividends rising to 17.5 sen per share, up from 17 sen in 2024, reflecting a commitment to shareholder returns. The attractive free cash flow yield of 7% suggests further potential for payout upside.
Future Outlook
Management forecasts low single-digit growth for both service revenue and EBITDA in 2026, with capital expenditure intensity projected to be between 10% and 12%. The company is well-positioned for market share gains, benefiting from a strengthened spectrum portfolio, including the acceptance of MCMC’s offer for a 2×10 MHz block in the 2100 MHz band for RM400 million in October 2025. This strategic acquisition is expected to support future growth and enhance service capabilities.
TA SECURITIES maintains a “BUY” recommendation for the company, affirming a target price of RM0.25, representing a potential upside of 25.0% from its last traded price of RM0.20.
