KUALA LUMPUR (Feb 5): CIMB Investment Bank Bhd has cut its target price for Maxis Bhd to RM6.40 from RM6.70, as the research house sees little earnings growth prospects for the telecommunications company over the next three years.

In a note today, CIMB said it had lowered its core net profit forecasts for FY16 and FY17 by 7.5% and 4.7% respectively, after taking into account higher depreciation and interest expense, due to higher expected capital expenditure (capex) for the two years.

The research house expects higher capex of RM1.3 billion and RM1.2 billion for FY16 and FY17 respectively, compared to RM1.2 billion and RM1 billion previously.

"We now forecast FY16 EBITDA (earnings before interest, taxation, depreciation and amortisation) to grow by 1.8%, which is a bit more optimistic versus Maxis' guidance for flat EBITDA," it said.

For the fourth quarter ended Dec 31, 2015 (4QFY15), Maxis saw its net profit rise 38% to RM468 million from RM339 million a year earlier, while revenue inched 3% to RM2.18 billion from RM2.12 billion in 4QFY14.

For the cumulative full-year period, net profit rose 1% to RM1.74 billion from RM1.72 billion a year ago, on the back of a 3% increase in revenue to RM8.6 billion from RM8.39 billion.

CIMB said the results were in line with expectations, but the dividend payment of 20 sen per share announced was below its forecast for a payout of 23.5 sen.

While Maxis' topline performance is holding up well, the research house said losses by revenue generating subs (RGS) was a concern.

"While these are mainly lower-ARPU (average revenue per user) RGS, a continued decline could eventually have an impact on revenues. If current aggressive postpaid promos are sustained, we believe it may also be difficult to drive further revenue uplift from MaxisOne plan adoption," it said.

Maxis shares fell 7 sen or 1.14% to RM6.08 at 10.30am, giving a market capitalisation of RM46.19 billion.