Maxis fundamentals remain intact amid dip

PETALING JAYA: Maxis Bhd’s fundamentals remain intact, aligning with its recent solid third quarter for the financial year 2026 (3Q26) results, which analysts say were broadly within market expectations.

The telecommunication company group posted a core net profit (CNP) of RM447mil in 3Q26, up 8.5% year-on-year, bringing nine months CNP to RM1.3bil.

An interim dividend of 4.5 sen was also declared.

In a note to clients, CGS International (CGSI) Research upgraded its call on Maxis to “add” from hold with an unchanged target price (TP) at RM3.72 a share, following its better-than-expected quarterly results and the recent 4.6% share price decline over the past three months, resulting in a potential total shareholder return of 12.2%.

“We see continued delivery of good results as the key re-rating catalyst,” the research house added.

CGSI Research also raised Maxis’ financial year 2026 (FY26), FY27 and FY28 CNP estimates by 16.5%, 6.5% and 10.4% respectively as it pushed out its assumption for equity accounting of Digital Nasional Bhd (DNB) losses to begin in December 2026 from July 2026 previously.

Other supporting factors include an increase in government grant incomes resulting from a higher run rate than previously assumed, incorporating the acquisition of Astro broadband subscribers for RM83mil, effective the second half of FY27 and removing the assumption of capital injections into DNB between FY27 and FY28, following DNB’s debt refinancing in October 2026.

CGSI Research has also factored in the added two times 20MHz of 2600MHz spectrum that Maxis has been assigned for RM203mil, with RM21mil of annual fees, effective Nov 1.

On the reported merger talk between Maxis and U Mobile Sdn Bhd, the research house said, “In our view, such consolidation could be positive for the Malaysian mobile sector, as it could slow pricing erosion and improve long-term sector profitability.

For context, Maxis’ management did not confirm nor field questions on the news report at an analysts’ briefing recently.

Meanwhile, Hong Leong Investment Bank (HLIB) Research in its report said, “We continue to like Maxis for its resilient postpaid momentum and disciplined cost management.”

However, the reported potential Maxis-U Mobile merger talks are likely to remain an overhang until resolved, potentially capping near-term share price performance, it noted.

HLIB Research expects the acquisition price for U Mobile to be the key focus for investors, if it materialises.

The research house maintained a “buy” call on Maxis with an unchanged TP of RM4.45 per share.

On the group’s FY26 guidance, HLIB Research noted low single-digit growth in service revenue and earnings before interest, taxes, depreciation and amortisation, with its forecasts broadly in line at 2.1% and 3.3% respectively, and a capital expenditure intensity of 10%.

An analyst with a local brokerage expects Maxis’ continued delivery of good results as the key re-rating catalyst for the telco group.

The key downside risks include increased price competition weighing on earnings and valuations, more stringent coverage and quality requirements imposed by the regulator and limits on price adjustments as inflationary pressures mount.

“Valuations are attractive, in our view, as the stock is trading at 17.1 times its post-2021 mean FY27 forecast price-to-earnings.

“A 5.9% FY26 dividend forecast also provides further support,” the analyst added.