Maxis posted a 9.4% decline in 4QFY21 net profit to RM289m. Although revenue increased by 8.3% YoY due to stronger contribution from device sales and the home fibre business, earnings were dragged by a 13.8% jump in total expenses namely depreciation and amortisation, direct cost and staff cost. The full-year FY21 results were broadly in line with our and street estimates. Nevertheless, we are cutting our FY22F earnings by 9.6% after factoring in higher effective tax rate due to Cukai Makmur. Our TP is revised to RM4.40 from RM4.68 previously. We maintain our Neutral call on Maxis. A fourth and special interim dividend of 4.0sen and 1.0sen per share were declared, bringing FY21 total dividend to 17.0sen per share (FY20: 17.0sen per share)
- 4QFY21 revenue improved by 8.3% YoY due to higher device sales and home fibre revenue. Home fibre business continued to gain traction with the number of connections growing from 402,000 in 4QFY20 to 494,000 in the current quarter. This was mainly due to strong adoption of MaxisONE Prime converged packages. ARPU for home fibre has also increased by 2.8% to RM110, supported by upselling to higher speed packages. Meanwhile, mobile revenue was flat as the drop in prepaid revenue was offset by higher postpaid revenue.
- 4QFY21 net profit was down 9.4% YoY. Despite the increase in revenue, net profit was down due to higher cost, particularly direct cost (+19.5%), staff cost (+17.2%) and depreciation and amortization charges (+14.2%). The increase in amortisation was due to a prudent adoption of reduced spectrum life, following the Malaysian Communications and Multimedia Commission’s revision to the Standard Radio System Plans that limits Maxis’ ability to repurpose its spectrum to radiate future radio technologies. Meanwhile, the increase in depreciation cost was in line with the growth in core network and investment in new IT platforms.
- Providing solutions for every customer segment. In order to sustain itself as a converged service provider in Malaysia, Maxis is expected to expand its product offerings to include digital solutions for enterprises while maintaining its leadership position in the mobile segment. In both the prepaid and postpaid market, Maxis remains the market leader, backed by its extensive 4G network coverage across the nation. Meanwhile, its fibre broadband is complementing the mobile and enterprise business with coverage reaching more than 21,000km.
Source: PublicInvest Research - 25 Feb 2022