Quick take: Maxis stock drops on lower profit

KUALA LUMPUR: Maxis Bhd

shares are sitting marginally lower on Monday morning after announcing a lower earnings in the fourth quarter ended Dec 31, 2018.

The telco, fell 0.36%, or two sen to RM5.61 in early trade.

 

operator posted a net profit of RM266 million in 4QFY18 from RM541 million a year ago.

In the fourth quarter ended Dec 31 (4Q18), Maxis’ net profit halved to RM266mil in the fourth quarter ended Dec 31.

The telco declared a fourth interim dividend of five sen net per share, bringing full-year dividends to 20 sen a share.

Its revenue, however, grew 3% to RM2.44bil against RM2.37bil in the same period a year earlier. Its earnings per share for the period stood at 3.40 sen from 6.9 sen previously.

For the full financial year, Maxis posted a net profit of RM1.78bil on revenue of RM9.19bil.

The telco has also announced an allocation of RM1bil over the next three years for incremental capital expenditure (capex) to support its new strategy to become a converged communications and digital services company in both the fixed and mobile markets.

The new strategy aims at broadening the group’s revenue base to deliver internal service revenue target in excess of RM10bil by 2023.

MIDF Research has downgraded Maxis to “sell” with a revised target price of RM4.73.

The research house said due to the weaker 4QFY18 results, full year FY18 normalised earnings amounted to RM1,767mil. This translates into a contraction of -14.7%yoy, despite a -2.4%yoy decline in group revenue.

“All in, the group’s FY18 financial performance came in below ours and consensus expectations, accounting for 87.7% and 90.8% of full year FY18 earnings estimates respectively,” MIDF said.

The group declared 4Q18 dividend of 5 sen per share. This led to full year FY18 dividend of 20 sen per share, in-line with MIDF’s expectation.

“In light of the weaker-than-expected FY18 reported earnings, we are revising lower FY19 earnings forecasts by -18.7%. We are inputting lower profit margin of 18.3% as compared to 23.5% previously,” it said.

Sources from TheStar

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