This article first appeared in The Edge Financial Daily on April 24, 2019
Maxis Bhd
(April 23, RM5.34)
Maintain underweight with an unchanged fair value (FV) of RM4.60: We maintained our “underweight” recommendation on Maxis with an unchanged discounted cash flow-derived FV of RM4.60 per share, based on a weighted average cost of capital discount of 6.4% and a terminal growth assumption of 2%.
The FV implies a financial year 2019 (FY19F) enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/Ebitda) of 12 times and is on par with its three-year average.
Following Maxis’ home fibre promotional launch earlier this month with three free temporary cellular SIM cards, the group now offers faster business fibre plans at 300 megabit per second (Mbps) at RM199 a month, 500Mbps (RM269 a month), and 800Mbps (RM349 a month). The broadband provider is also providing 2X Mesh WiFi devices and a cloud-based Internet security solution for its 300Mbps plan and above.
The new faster plans come with an Internet protocol (IP) voice line offering unlimited calls and options of five extra lines at an additional RM110 a month, and nine extra lines at an additional RM200 a month. The additional IP voice lines come with unlimited on-net calls and 1,000 shareable minutes.
For business users, Maxis currently offers 30Mbps at RM99 a month and 100Mbps (RM139 a month) — far more attractive compared with Time dotCom Bhd’s RM188 a month for 20Mbps, 50Mbps (RM318 a month) and 100Mbps (RM348 a month).
For a further comparison, Unifi Biz Lite offers only 10Mbps at RM179 a month, 30Mbps (RM249 a month), 50Mbps (RM299 a month) and 100Mbps (RM349 a month).
Maxis offers a cloud storage and email solution for RM22 a month as well — with one terabyte of cloud storage for storing photos, videos and documents, and 50 gigabytes for emails.
Other add-ons include free WiFi, a managed WiFi solution at RM80 a month enabling bandwith control for business and customer use, and a customised WiFi login page for promotional strategies or customer data collection for marketing purposes. The managed WiFi add-on also comes with a free enterprise-grade WiFi access point worth RM2,000.
Besides younger customers, Maxis is aggressively targeting the small and medium business and enterprise (SME) segments.
While we’re positive about this fresh initiative, we remain wary of Time and Unifi’s eventual countermeasures which could reignite a further price competition. Hence, we retained our forecasts for now. — AmInvestment Bank, April 23