KUALA LUMPUR: Maybank Equity Research has upgraded Maxis to a Buy with a DCF-derived RM6.20 target price from RM5.80.

It said on Tuesday, March 9 that as all celcos focus on expanding domestic market share in 2010, it expects Maxis’ larger advertising muscle and scale economies to sustain earnings growth and market share resilience.

Maybank Equity Research said 2009 was a year of consolidation and investment although 4Q09 net subscriber additions hint at a more aggressive stance in 2010.

Maxis ended 2009 with no market share losses in subscriber terms, at 40.5% (4Q09: +0.9%-pts QoQ) which was a bonus.

“We believe that Maxis is now committed to defending its market-leadership by ensuring it at least matches the average industry growth rate, given its rivals’ aggressive price promotions,” it said.

However, it lowered its net profit forecasts by 7% and 9% for 2010 and 2011, although EBITDA growth is raised to 5% and 6% respectively.

The lower net profits are mainly a function of greater investment in its network capacity and higher finance costs although EBITDA will still grow.

“Nevertheless, the minimum dividends we expect Maxis to pay out in 2010 is now raised to an 85% payout of net profit translating to a 4.7% net dividend yield in 2010, sustainable into 2012.

“Buy, with ease of mind. We raise our DCF-value to RM6.20 as we update our DCF assumptions given better clarity post-IPO (beta: 0.8 from 1.0; WACC: 8.6% from 9.2%),” it said.