MAXIS BERHAD Resilient Earnings
DESCRIPTION
The largest mobile operator in Malaysia, providing mobile and fixed voice services, messaging, mobile Internet, wired and wireless broadband and IPTV.
| 12-Month Target Price | RM3.90 |
| Current Price | RM3.44 |
| Expected Return | 13.4% |
| Previous Target Price | RM3.90 |
| Market | Main |
| Sector | Telecommunications |
| Bursa Code | 6012 |
| Bloomberg Ticker | MAXIS MK |
| Shariah-compliant | Yes |
SHARE PRICE CHART
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Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25
| 52 Week Range (RM) | 3.22 – 4.00 |
| 3-Month Average Vol (‘000) | 2,894.6 |
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | -3.9 | -2.8 | 2.3 |
| Relative Returns | -7.3 | -10.4 | -0.7 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 26,942.4 |
| No. of Shares (m) | 7,832.1 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Binariang GSM | 62.3 |
| EPF | 12.0 |
| Skim Amanah Saham Bumiputra | 10.4 |
Maxis Bhd (Maxis) delivered an 11.8% YoY increase in 2QFY25 net profit to RM398m, driven by operational efficiency. Cumulative 1HFY25 results came in within our and consensus expectations, accounting for 53% and 52% of full-year estimates, respectively. 2QFY25 revenue was marginally lower, down 0.9% YoY due to lower contribution from the prepaid segment as a result of a 7.3% drop in ARPU. However, earnings was higher mainly due to lower operating costs. Since our downgrade on 19 May, Maxis’ share price has fallen by about 9%. Trading at a forward PER of <20x and an upside potential of 13% to our RM3.90 TP, share price looks undemanding at the current level. Coupled with a stable profit that is less susceptible to external shocks, we upgrade our rating on Maxis from Neutral to Trading Buy. A second interim dividend per share of 4.0sen was declared (2QFY24: 4.0sen per share). Dividend yield remains attractive at c.5% p.a.
- 2QFY25 revenue was marginally lower as the increase in postpaid revenue was offset by a decline in the prepaid revenue. While postpaid subscriber base jumped by 10.1% YoY, ARPU fell by 5.2% YoY with the enhanced data proposition packages offering greater value and affordability to customers. Prepaid customer base was slightly higher (+1.4% YoY) while ARPU dropped by 7.3% YoY due to targeted product offerings. Meanwhile, enterprise business and home fibre continued to contribute around 11% and 18% of total service revenue, respectively.
- 2QFY25 net profit rose 11.8% YoY, mainly due to lower direct costs which dropped by 8.2% YoY. Most cost items remained relatively well-contained except for network cost, which increased by 7.9% YoY. EBITDA margin improved to 49.6% from 47.2% in 2QFY24. Data usage was higher at 34.3GB/month, a 16.7% increase from a year ago. The increase in data usage for prepaid users was stronger compared to postpaid users at 18.5% versus 14.4%.
- Outlook. Maxis has recently provided an additional shareholder advance of RM116.67m to Digital Nasional Bhd (DNB) to support its deployment of 5G network and strengthen the state-owned network provider’s financial position. Earlier on, Maxis has invested RM233m in DNB for a 14% stake back in December 2023 but following the exit of Telekom and U Mobile, Maxis’ stake in DNB was raised to 19.44% currently. The total investment made by Maxis in DNB has now increased to RM350m. This advance will be interest-free and we expect it to be treated as prepayments to offset future access fee payments for DNB’s wholesale services. However, we are concerned of DNB seeking more advances in the future as we believe competition would intensify once U Mobile rolls out its 5G network (targeting 80% population coverage by 2H2026). By collaborating with two stronger partners, Huawei and ZTE, we believe the quality of the second 5G network provider’s services may be more superior and advanced.
KEY FORECAST TABLE
| FYE Dec (RMm) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 10,180 | 10,536 | 10,627 | 11,121 | 11,649 | 3.4% |
| Operating Profit | 1,890 | 1,944 | 2,452 | 2,524 | 2,605 | 10.3% |
| Pre-tax Profit | 1,444 | 1,877 | 1,975 | 2,115 | 2,235 | 6.0% |
| Core Net Profit | 1,352 | 1,396 | 1,462 | 1,565 | 1,654 | 5.8% |
| EPS (Sen) | 17.3 | 17.8 | 18.7 | 20.0 | 21.1 | 5.8% |
| P/E (x) | 19.9 | 19.3 | 18.4 | 17.2 | 16.3 | |
| DPS (Sen) | 16.0 | 17.0 | 17.7 | 19.0 | 20.1 | |
| Dividend Yield (%) | 4.7 | 4.9 | 5.2 | 5.5 | 5.8 |
Eltricia Foong
T 603 2268 3000
F 603 2268 3014
E eltriciafoong@publicinvestbank.com.my
Table 1: Results Summary
| FYE Dec (RMm) | 2Q25 | 2Q24 | YoYchg (%) | QoQ chg (%) | 1HFY25 | YoY chg (%) | Comment |
|---|---|---|---|---|---|---|---|
| Revenue | 2,562.0 | 2,586.0 | (0.9) | (1.8) | 5,170.0 | (0.4) | Marginally lower due to weaker prepaid revenue |
| Total Expenses | (1,469.0) | (1,552.0) | (5.3) | (5.6) | (3,025.0) | (2.8) | Lower direct cost |
| EBITDA | 1,093.0 | 1,034.0 | 5.7 | 3.9 | 2,145.0 | 3.3 | |
| Depreciation & amortisation | (446.0) | (439.0) | 1.6 | 1.1 | (887.0) | 0.0 | |
| Net interest | (110.0) | (112.0) | (1.8) | (0.9) | (221.0) | (3.1) | |
| Pretax profit | 537.0 | 483.0 | 11.2 | 7.4 | 1,037.0 | 7.8 | Margin improvement due to lower cost |
| Tax | (139.0) | (127.0) | 9.4 | 7.8 | (268.0) | 5.9 | |
| Minorities | 0.0 | 0.0 | n.m | n.m | 0.0 | n.m | |
| Net Profit | 398.0 | 356.0 | 11.8 | 7.3 | 769.0 | 8.5 |
Table 2: Key statistics
Subscribers: (‘000)
| 2Q24 | 3Q24 | 4Q24 | 1Q25 | 2Q25 | |
|---|---|---|---|---|---|
| Prepaid | 7,497 | 7,494 | 7,438 | 7,566 | 7,601 |
| Postpaid & WBB | 5,256 | 5,368 | 5,509 | 5,670 | 5,770 |
| 12,753 | 12,862 | 12,947 | 13,236 | 13,371 | |
| Home fibre | 707 | 716 | 723 | 727 | 727 |
ARPU (RM/mth):
| 2Q24 | 3Q24 | 4Q24 | 1Q25 | 2Q25 | |
|---|---|---|---|---|---|
| Prepaid | 29 | 28 | 28 | 26 | 27 |
| Postpaid | 68 | 67 | 68 | 65 | 64 |
| Home fibre | 110 | 109 | 109 | 111 | 111 |
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Dec (RMm) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 10,180.0 | 10,536.0 | 10,626.7 | 11,121.0 | 11,649.4 |
| Operating Profit | 1,890.0 | 1,944.0 | 2,452.2 | 2,523.8 | 2,605.4 |
| Net interest cost | (446.0) | (450.0) | (477.0) | (409.0) | (370.0) |
| Pre-tax Profit | 1,444.0 | 1,877.0 | 1,975.2 | 2,114.8 | 2,235.4 |
| Income Tax | (452.0) | (469.0) | (513.6) | (549.9) | (581.2) |
| Effective Tax Rate (%) | 31.3 | 25.0 | 26.0 | 26.0 | 26.0 |
| Net Profit | 1,352.0 | 1,396.0 | 1,461.7 | 1,565.0 | 1,654.2 |
Growth
| 2023A | 2024A | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| Revenue (%) | 4.0 | 3.5 | 0.9 | 4.7 | 4.8 |
| Operating Profit (%) | -14.4 | 2.9 | 26.1 | 2.9 | 3.2 |
| Net Profit (%) | 17.4 | 3.3 | 4.7 | 7.1 | 5.7 |
BALANCE SHEET DATA
| FYE Dec (RMm) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| PPE | 5,384.0 | 5,091.0 | 5,197.3 | 5,308.5 | 5,448.3 |
| Intangible assets | 11,193.0 | 11,042.0 | 11,222.0 | 11,402.0 | 11,583.0 |
| Cash at bank | 569.0 | 464.0 | 402.6 | 352.4 | 292.7 |
| Other assets | 5,635.0 | 5,726.0 | 5,285.2 | 5,123.5 | 4,947.1 |
| Total Assets | 22,781.0 | 22,323.0 | 22,107.1 | 22,186.3 | 22,271.0 |
| Short-term borrowings | 857.0 | 1,193.0 | 1,000.0 | 1,000.0 | 1,000.0 |
| Long-term borrowings | 8,915.0 | 8,096.0 | 8,000.0 | 8,000.0 | 8,000.0 |
| Payables | 4,126.0 | 4,111.0 | 4,111.0 | 4,111.0 | 4,111.0 |
| Other liabilities | 3,139.0 | 3,017.0 | 3,018.0 | 3,019.0 | 3,021.0 |
| Total Liabilities | 17,037.0 | 16,417.0 | 16,129.0 | 16,130.0 | 16,132.0 |
| Shareholders’ Equity | 5,744.0 | 5,906.0 | 5,978.1 | 6,056.3 | 6,139.0 |
| Total Equity and Liabilities | 22,781.0 | 22,323.0 | 22,107.1 | 22,186.3 | 22,271.0 |
PER SHARE DATA & RATIOS
| FYE Dec | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share | 0.7 | 0.8 | 0.8 | 0.8 | 0.8 |
| Core EPS (Sen) | 17.3 | 17.8 | 18.7 | 20.0 | 21.1 |
| DPS (Sen) | 16.0 | 17.0 | 17.7 | 19.0 | 20.1 |
| Payout Ratio (%) | 92.7 | 95.4 | 95.0 | 95.0 | 95.0 |
| Gross debt/EBITDA (x) | 2.6 | 2.3 | 2.1 | 2.1 | 2.0 |
| ROA (%) | 5.9 | 6.3 | 6.6 | 7.1 | 7.4 |
| ROE (%) | 23.5 | 23.6 | 24.5 | 25.8 | 26.9 |
RATING CLASSIFICATION
STOCKS
| OUTPERFORM | The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months. |
| NEUTRAL | The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months. |
| UNDERPERFORM | The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months. |
| TRADING BUY | The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call. |
| TRADING SELL | The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months. |
| NOT RATED | The stock is not within regular research coverage. |
SECTOR
| OVERWEIGHT | The sector is expected to outperform a relevant benchmark over the next 12 months. |
| NEUTRAL | The sector is expected to perform in line with a relevant benchmark over the next 12 months. |
| UNDERWEIGHT | The sector is expected to underperform a relevant benchmark over the next 12 months. |
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document.
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T 603 2268 3000
F 603 2268 3014
