MAXIS: Telecommunications Giant Posts Above-Expectations Earnings, Driven by Cost Management
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM4.20 (+6.3%) |
| Last Traded | RM3.95 |
| Recommendation | HOLD |
A leading telecommunications company has reported 9MFY25 core profits that significantly surpassed both internal and consensus estimates, primarily driven by robust cost optimisation efforts. The strong performance has led TA Securities to maintain its “Hold” recommendation on the stock, with an upward revision of its target price.
Performance Review
The company’s 9MFY25 core profit reached RM1,181.0 million, exceeding TA Securities’ full-year estimate by 77.9% and consensus estimates by 79.4%. This performance is largely attributed to effective cost management, which saw EBITDA grow by 3.6% year-on-year to RM3,251 million, contributing to a 9.9% increase in core profit. Quarter-on-quarter, 3QFY25 service revenue improved by 1.7% to RM2,241 million, with EBITDA rising 0.7% to RM1,102 million and core net profit climbing 3.5% to RM412 million.
While the enterprise segment demonstrated strong momentum with a 3.3% increase in service revenue to RM1,223 million, supported by growth in mobile subscriptions and wholesale contributions, the consumer segment experienced a slight decline. Year-on-year 9MFY25 service revenue saw a marginal 0.1% dip to RM6,616 million, primarily due to a new commercial arrangement for its Safe Device Programme and lower regulated interconnect rates impacting consumer business revenue, which fell 0.8% to RM5,393 million. Despite this, total consumer subscriptions expanded by 57,000 quarter-on-quarter to 10,655k, driven by net additions across postpaid and prepaid segments.
Future Outlook
Management has revised its FY25 EBITDA growth guidance upwards from a low to mid-single-digit range, citing improved cost efficiency as the key driver. Service revenue growth guidance is expected to remain in the low single-digit range, with capital expenditure projected at approximately RM1.0 billion. The company also announced that the recently secured 2100MHz spectrum will be primarily utilised to enhance network quality and expand market share.
Regarding the shareholding structure of Digital Nasional Berhad (DNB), management indicated no new developments from the Ministry of Finance. The previously agreed put option, requiring MAXIS, CDB, and YTLP to acquire the remaining 41.7% stake in DNB, remains effective one month after November 12, 2025.
Analyst’s View
TA Securities has adjusted its target price to RM4.20, up from RM3.68, based on a Discounted Cash Flow (DCF) valuation with an 8.0% Weighted Average Cost of Capital (WACC), a 1.5% terminal growth rate, and a 3% ESG premium. The investment bank also raised its FY25/FY26/FY27 earnings forecasts by 4.3%, 4.7%, and 3.4% respectively, accounting for lower operating expenses. Despite the positive earnings revision and target price increase, TA Securities maintains a “Hold” call on the stock. The last traded price was RM3.95, reflecting a 6.3% upside to the new target price.
