In Kenanga’s research note on Maxis Berhad’s latest quarterly earning report, the telco’s 1HFY22 results met expectations with subscribers, in both the prepaid and postpaid segments and B2B revenue, remained robust while home connections continued to show positive momentum with blended ARPU looking stable.
The company is upbeat on FY22, guiding for a mid-to-single digit increase in service revenue with a stable EBITDA margin despite inflationary risks. Kenanga has maintained its OUTPERFORM call and TP of RM3.90.
The first half profit of RM627m met expectations, at 50% and 49% of the full-year forecast and full-year consensus estimates respectively. A DPS of 5.0 sen declared brought interim DPS to 10.0 sen, on track to meet Kenanga’s full-year expectations of 16.0 sen. Results highlight. 1HFY22 revenue improved 7% to RM4.8b underpinned by better performance from service revenue (+4.6%) to RM2.1b. EBITDA fell slightly (-1.6%) to RM1.9b on the back of 2ppt margin erosion to 41%. CNP declined 11% YoY to RM629m on account of the Cukai Makmur, resulting in an uptick of 7ppt to 33% in its
effective tax rate.
Its mobile subscribers grew marginally by 2% to 10.1m. An 8% growth in postpaid subscribers (driven by attractive bundling of mobile and home broadband), was partially offset by a 2% contraction in prepaid subscribers. In 2QFY22, there was a 2% QoQ growth in prepaid subscribers driven by the return of foreign workers as borders
reopened.
Home internet grew 18% YoY to 638k translating to revenue of RM409m or 20% growth YoY. ARPU remained stable at RM111. B2B revenue remained solid at 5% YoY translating to an RM774m in revenue. Attractive bundling and promotions contributed to the positive momentum in home internet while B2B momentum was driven by the
reopening of the economy.
Key takeaways from the results briefing are as follows:
- The company guided for a low-to-mid-single digit increase in service revenue (notwithstanding the commercial 5G launch) with EBITDA likely to remain flat to a low single-digit increase from FY21 level (42%), which is in line with assumptions. MAXIS believes that it should be able to manage further cost pressures, if any, in the second half.
- The telco also refrained from commenting with regards to Digital Nasional Bhd, this is assumed that negotiations (or possibly fine-tuning) with the government on pricing and annual outlay commitment are still ongoing. The company emphasised that its dividends pay-out are based on FCF/share. Its operating free cash flow (OFCF) remained robust at RM1.6b (+15% YoY) with the strongest interim performance in the last five years. With capex likely to be reduced in the coming years
with the DNB partnership, Maxis is confident of maintaining robust dividend payouts as in previous years.
