Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (July 25): CGSCIMB Research has maintained its “Reduce” rating on Maxis Bhd at RM5.61 with a higher target price of RM5.40 (from RM5.10) and said it forecasts service revenue at RM8.6 billion in FY23.

In a note July 24, the research house said if Maxis is able to deliver on its target, this would mean an incremental revenue of RM1.4 billion per annum and potential enhancement to its fair value by 21-31 sen/share (3.9-5.7%).

“Nevertheless, we prefer to wait till we see an inflection point in revenue before factoring in any value accretion, as a) this segment has proven to be difficult for Maxis to scale up in the past and b) any significant earnings contribution will likely be backloaded (i.e. FY21 or later) as capabilities could take time to build/acquire and startup cost (e.g. skilled manpower) may be incurred ahead of revenue.

“We think Maxis will be able to keep annual DPS at 20 sen in FY19-21F (though upside is limited), with net debt/EBITDA at 1.8-2.0x (including RM1 billion growth capex).

“If we include a potential RM1.1 billion of spectrum payments in FY20F, net debt/EBITDA peaks at a still manageable 2.2x by end-FY20F and falls back to 2.1x/1.8x at end-FY21/22F,” it said.  

The research house added Maxis says it has lifted its previous self-imposed net debt/EBITDA ceiling of 2.0x.

“Maintain Reduce with 6% higher target price of RM5.40. Pricey valuation,” it said.

 

      Print
      Text Size
      Share