Thursday, August 25, 2011

Maxis Berhad Earnings Evaluations: 1H11 Results: In Line With Our Expectation

26 August 2011
Price Target: RM5.51
Share Price: RM5.48


Results
1H11 reported core net profit of RM1,090m (-3.7%) came in within our expectation, at 48.2% of our full-year forecast. Against consensus, the results came in below, accounted for only 45.4% of the full-year estimates.

Deviations
None.

Dividend
Declared interim NDPS of 8.0 sen.

Highlights
# Qoq, 2Q11 core net profit rose by 2.2% to RM551m on the back of: (1) Higher topline; and (2) Lower hubbing and marketing expenses.

# Revenue growth guidance. Expecting revenue growth of 3-3.5% in 2011.

# Subscribers. Prepaid subscribers grew 0.1% qoq to 9.51m, while postpaid subscribers declined by 0.9% to 2.62m.Management feels that the decline in postpaid
subscribers could be due to cannibalization from the prepaid segment.

# ARPU. Postpaid ARPU rose to RM108 (+2.9% qoq), driven mainly by non-voice component resulting from increased data bundle take-up. Prepaid ARPU, on the other hand, rose to RM36 (+5.9% qoq) on the back of 3.6% qoq increase in MOU.

# Capex. 2011 capex guidance lowered further to RM1.2bn

from RM1.3bn guided during 1Q11’s conference call.

Risks
Government, regulatory, industry and execution risks.

Forecasts
Maintained.

Rating - HOLD (Target Price: RM5.51)
Positives
New business potential in converged services, strong postpaid ARPUs.

Negatives
Initially low margin fixed-services would depress margins, weakening prepaid ARPUs.

Valuation
Our DDM-derived Target Price of RM5.51 remains unchanged. At RM5.42, Maxis is trading at FY11-12 P/E of 18.2x and 16.7x respectively.



Source: HLIB Research

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