Dividend appeal for Maxis still present
KUCHING: Maxis Communications Bhd (Maxis) is expected to record lower earnings for its first quarter 2013 (1Q13) due to higher overheads but analysts are bearish on the company’s dividend for the coming quarter.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Maxis was expected to release its 1Q13 result today and analysts were anticipating an earnings decline in the region of eight per cent to 12 per cent year on year (y-o-y), attributable to a possible higher depreciation and higher operating costs in 1Q13.
“For 1Q13, we expect only marginal recovery in earnings before interest, tax, depreciation and amortisation (EBITDA) margin, to circa 47 per cent.
“Maxis was aggressive in reducing the rates for its pre-paid and IDD services in FY12, and it will take some time for these rates to ‘normalise’ if at all,” stated the research house.
“Hence, we are anticipating 1Q13 EBITDA to fall circa five per cent to six per cent y-o-y on the back of higher operating expenditure and revenue pressure.”
The research house also noted that it was anticipating Maxis to register 1Q13 revenue growth of 3.6 per cent y-o-y to RM2.31 billion stating that the continued non-voice revenue expansion would be the main contributor to growth.
“We are expecting non-voice revenue to expand by a high single digit. The dominant contributor to non-voice revenue will be internet and non-SMS data services,” it explained.
Touching on the topic of LTE, MIDF Research added, “we expect the LTE service launched by Maxis in 1Q13 will not make a significant contribution yet to its revenue and earnings.
“This is due to the fact that it is still early days for LTE and subscriber additions will be limited.
“However, we believe its move to become the first LTE provider was to ensure that it remains competitive in the mobile communication landscape.
“Whilst we do not believe that LTE will be major factor in FY13, being the first operator may accord it first mover advantage.
“One area that may continue to make in-roads is Maxis Home. In our opinion, Maxis’ appeal has always been its steady and generous dividend. As per previous trend, we expect Maxis to announce an interim dividend of sight sen.
“For FY13, we expect dividend of 40 sen which gives a yield of 5.7 per cent,” it concluded.