MAYBANK IB Research has upgraded Maxis Bhd to hold following a possible 5G network collaboration between the telecommunications giant and rival Celcom Axiata.
Research analyst Tan Chi Wei, in a Dec 11 research note, also maintained an unchanged target price of RM5.20, claiming that the 5G rollout, due for 2022 or 2023, is not a near-term risk for the group. This follows the expressed intent of Maxis to collaborate with Celcom Axiata to deploy a network for 5G.
Tan noted that Maxis has also had a busy few months, as “the enterprise push is progressing unabated” while centred on the group’s ambition to become a leading converged Information and Communications Technology (ICT) solutions provider.
“Maxis has now hired about 350 staff to build up its ICT capabilities, signed a new access agreement for fibre networks in Sabah, and recently formed a number of commercial partnerships with technology vendors such as Cisco Malaysia and Amazon Web Services,” said Tan.
He also pointed out that Maxis is targeting an annual revenue accretion of about RM1 bil by 2023 from an incremental RM1 bil capital expenditure over three years.
“The earnings uplift would likely be back-loaded in our view, with the initial years possibly being spent on building expertise and raising prominence in the ICT space,” noted Tan, adding that there is a potential accretion of between 25 sen and 73 sen per Maxis share, should this revenue target be achieved.
As the market opens for the afternoon, Maxis’ shares were traded at RM5.15, up four sen, with 179,000 shares changing hands. – Dec 16, 2019
