Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: OSK
Maxis Bhd
(June 1, RM5.20)
Maintain neutral at RM5.22 with target price of RM5.80: Maxis' 1QFY10 core earnings of RM552 million (-1.1% year-on-year/-5% quarter-on-quarter) made up 21% of our and consensus full-year forecast.
Revenue rose 1.1% y-o-y but eased 3% q-o-q due to (i) seasonality (shorter festivity-induced quarter/business closure/lower roaming revenue); and (ii) the slide in voice and wireless broadband (WBB) ARPUs (average revenue per user).
This was despite the decent 3% q-o-q (+11.4% y-o-y) subscriber growth as prepaid revenue per minute (RPM) came under renewed pressure coupled with the promotional offer of two-months' subscription waiver on its WBB plans introduced in 4Q09.
WBB additions slowed to 49,000 in 1Q10 from a strong 75,000 in 4Q09 as it ceded the share of additions to a much stronger Celcom, which garnered 124,000 subscribers during the quarter. The board has declared a first interim dividend of eight sen per share (payable on June 30), implying a net payout of 109%.
Tight cost controls have enabled Maxis to maintain its superior (Ebitda) earnings before interest, tax, depreciation and amortisation margin of 50.3% in 1Q10, steady q-o-q.
Data revenue contribution inched higher to 34.8% from 34.4% in 3Q09 although its non-voice revenue was flat q-o-q.
The management expects more pressure on broadband price-points (WBB ARPU fell to RM69 in 1Q10 from RM85 in 4Q09) as the mobile and alternative broadband providers slug it out to court subscribers in meeting the government's target of 50% broadband penetration by end-2010.
We note that Maxis' advanced data services (ADS) revenue has grown remarkably over the past five quarters, with 50% of it subs base now being active mobile Internet users.
Maxis is finalising the commercial terms of the HSBB (high-speed broadband) wholesale arrangement with TM for last mile access and backhaul investments. It expects to be able to roll out fixed broadband services to 65,000 homes and businesses by end-3Q10, pitting its services against TM's UniFi.
We gather from the management that an agreement had also been inked with Tenaga Nasional Bhd for Maxis to deliver fixed broadband to homes via the stringing of cable on power poles. This would be a more cost effective way to deliver high speed broadband to the masses compared to laying out ground cables. ' OSK Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2010.
Company Name: MAXIS BERHAD
Research House: OSK
Maxis Bhd
(June 1, RM5.20)
Maintain neutral at RM5.22 with target price of RM5.80: Maxis' 1QFY10 core earnings of RM552 million (-1.1% year-on-year/-5% quarter-on-quarter) made up 21% of our and consensus full-year forecast.
Revenue rose 1.1% y-o-y but eased 3% q-o-q due to (i) seasonality (shorter festivity-induced quarter/business closure/lower roaming revenue); and (ii) the slide in voice and wireless broadband (WBB) ARPUs (average revenue per user).
This was despite the decent 3% q-o-q (+11.4% y-o-y) subscriber growth as prepaid revenue per minute (RPM) came under renewed pressure coupled with the promotional offer of two-months' subscription waiver on its WBB plans introduced in 4Q09.
WBB additions slowed to 49,000 in 1Q10 from a strong 75,000 in 4Q09 as it ceded the share of additions to a much stronger Celcom, which garnered 124,000 subscribers during the quarter. The board has declared a first interim dividend of eight sen per share (payable on June 30), implying a net payout of 109%.
Tight cost controls have enabled Maxis to maintain its superior (Ebitda) earnings before interest, tax, depreciation and amortisation margin of 50.3% in 1Q10, steady q-o-q.
Data revenue contribution inched higher to 34.8% from 34.4% in 3Q09 although its non-voice revenue was flat q-o-q.
The management expects more pressure on broadband price-points (WBB ARPU fell to RM69 in 1Q10 from RM85 in 4Q09) as the mobile and alternative broadband providers slug it out to court subscribers in meeting the government's target of 50% broadband penetration by end-2010.
We note that Maxis' advanced data services (ADS) revenue has grown remarkably over the past five quarters, with 50% of it subs base now being active mobile Internet users.
Maxis is finalising the commercial terms of the HSBB (high-speed broadband) wholesale arrangement with TM for last mile access and backhaul investments. It expects to be able to roll out fixed broadband services to 65,000 homes and businesses by end-3Q10, pitting its services against TM's UniFi.
We gather from the management that an agreement had also been inked with Tenaga Nasional Bhd for Maxis to deliver fixed broadband to homes via the stringing of cable on power poles. This would be a more cost effective way to deliver high speed broadband to the masses compared to laying out ground cables. ' OSK Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2010.
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