BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2013(031743)

Thursday, 28 June, 2012

Company Update

Maxis
New IPTV coming in July
Stock Data Bloomberg Ticker Market Cap Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily volume Free Float Shariah Compliant Financial Derivatives Share Performance (%) Absolute vs. KLCI Financial Highlights FY 31 Dec (RMm) Turnover EBITDA Pretax profit Core Net Profit EPS (sen) PER (x) DPS (sen) Div. Yield (%) NTA/share (RM) EBITDA margin Pretax margin Effective tax rate ROE ROA Net Gearing (x) Growth ratios Turnover EBITDA Pretax profit Core Net profit EPS Share Price Chart
6.60
6.40

Buy
Price: RM6.40 Target Price: (7.8% upside) RM6.90
6.5 16.8% 4.6% 0.5 70.0% 5.4% 5.2% Maxis 48,000.0 MK 7,500.0 Equity 6.65 5.16 4,603,88 19.5% 9 Y n.a. Altman Z-score YTD price chg YTD KLCI chg Beta Major Shareholders Binariang GSM SB EPF Skim Amanah Saham BU 3mth 9.3 5.5

1mth 5.6 15.1

12mth 25.6 15.1

Maxis is set to launch its Internet Protocol Television (IPTV) offering beginning July 2012. According to management, the management is targeting its IPTV to the 6.4m TV households in the country. The IPTV offers various channels included Free to Air. We are positive on this however, we have not made changes in our earnings forecast as it is too early to determine the immediate impact on earnings. Maxis remains our top pick of the telco sector. Target price remains unchanged at RM6.90. Maintain BUY. IPTV through Maxis Home Fibre Internet. Together, all these content partners will provide the first wave of rich IPTV content through the Maxis Home Fibre Internet service providing movies, series and other programmes from multiple genres including Drama Series, Lifestyle and Travel, Kids, Action Sports and Music. Services beginning July 2012. Maxis announced its partnership with 14 content providers yesterday. Through the strategic collaborations, Maxis is set to offer its IPTV services beginning July 2012. The content providers are LI TV International Ltd, Radio Television Malaysia, Red Bull GmBH, All Asia Multimedia Networks FZ-LLC, Media Prima Bhd, Brilliant Pictures, Vision Plus Entertainment, Travel Channel International, Classic Media Distribution, The Wiggles International, Five Star Production, Asa'ad Entertainment Network, Five Star Trading and Trace TV S.A. Free to Air TV included. In terms of Free to Air, the channels include TV1, TV2, TVi, TV3, NTV7, 8TV, TV9 along with additional content from LI Space, LI Body, LI Savour, LI Chic, Tonton, Travel Channel, Wiggles, Jump, Classic Media, Trace Urban, Trace Sports, XS, Red Bull, Five Star Trading, Five Star Production, Brilliant Pictures and Asaad. Huge potential market. According to management, Maxis is targeting its IPTV to the 6.4m TV households in the with 1.2m premises on high-speed broadband (HSBB) and its own fibre-optic customers. Monthly subscription fee is expected to be under RM200. No change in our forecasts. We have not made any changed to our forecast as it is too early to determine the impact on this product but we are positive on the companys long term outlook.

2009 7,611 2,624 1,939 1,578 21.0 30.5 15.0 2.3% (0.28) 34.5% 25.5% 18.6% 30.1% 15.1% net cash

2010 8,869 4,395 3,133 2,295 30.6 20.9 40.0 6.3% (0.31) 49.6% 35.3% 26.7% 26.1% 12.7% 0.48

2011 8,800 4,380 3,004 2,527 33.7 19.0 40.0 6.3% (0.40) 49.8% 34.1% 15.7% 30.2% 14.0% 0.62

2012E 9,210 4,672 3,128 2,346 31.3 20.4 40.0 6.3% (0.31) 50.7% 34.0% 25.0% 28.1% 12.8% 0.47

2013E 9,601 4,861 3,173 2,380 31.7 20.2 40.0 6.3% (0.21) 50.6% 33.0% 25.0% 26.7% 12.5% 0.28

5.9% 720.5% 42098% 42098% -1600%

16.5% 67.5% 61.6% 61.6% 45.7%

-0.8% -0.3% -4.1% -4.1% 10.1%

4.7% 6.7% 4.1% 4.1% -7.1%

4.2% 4.1% 1.4% 1.4% 1.3%

6.20
6.00

5.80
5.60

5.40
5.20

5.00
4.80 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12

Thong Pak Leng pakleng.thong@bimbsec.com.my 03-26918887 ext 186

Thebased on DCF valuation (WACC assumption of Research Team research@bimbsec.com.my of the telco sector and remains out top pick 03-26918887 ext 111 our BUY recommendation.

View & Valuation. We maintain our target price RM6.90 7.5%). Maxis we maintain

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28 June 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system:

Company Update: Maxis

STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my

Kenny Yee Head of Research

www.bimbsec.com.my

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