An uninspiring end
Awaiting enterprise accretion
4Q21 results were in line with our/consensus forecasts. 4Q is typically a weaker quarter for Maxis’ earnings due to seasonally higher device sales (subsidised). The earnings accretion from Maxis’ enterprise push has so far not been very apparent to us. Maintain HOLD with a lower DCF-based TP of MYR4.20 (-7%) post our earnings revisions. We prefer TM (T MK, BUY, CP: MYR5.34, TP: MYR7.40) in the Telco space.
Results in line
Maxis’ 4Q21 core net profit of MYR289m (-9% YoY, -11% QoQ) brings FY21 core net profit to MYR1,308m (-5% YoY), 1%/4% below our/consensus forecasts respectively. Maxis ceded service revenue market share to its fellow Big 3 mobile peers in the quarter. A 5sen DPS was declared, bringing full-year DPS to 17sen (unchanged YoY).
Sequentially weaker revenue trends
In 4Q21, total service revenue declined by 0.8% QoQ, with mobile service revenue declining by 2.4% QoQ on the back of ARPU erosion at both prepaid and postpaid. Prepaid notably experienced a temporary dip from network coverage gaps post 3G sunset. Broadband (both fibre and wireless) continues to post strong subscriber gains, while financial disclosure on enterprise remains minimal. Opex meanwhile increased QoQ mainly from higher device costs, with 4Q being a seasonally busy quarter for device sales. Consequently, 4Q21 normalised EBITDA margin compressed by 5.8ppt QoQ to 37.9%.
Maintaining its ‘no guidance’ stance
Management has again refrained from providing forward guidance. We lower our FY22/23 net profit forecasts by 8%/6% respectively to reflect latest run rates, and introduce FY24 forecasts. Our DCF-based TP (assuming 7.2% WACC and 2% LT growth) is consequently lowered to MYR4.20 (from MYR4.50). In our view, enterprise accretion could potentially begin to manifest more meaningfully in FY22.