Friday, March 06, 2009

Maybank's rights issue's share price fixed at RM2.74

Yesterday, Maybank has fixed the issue price of the rights shares at RM2.74 per rights share. This will give the rights shares a discount of 34.4% from the theoretical ex-rights price of RM4.17 per share and a discount of 43.2% to the closing price of RM4.82.

Let's re-examine the TMI's rights issue. Assuming that TMI's management wants to raise RM5.25 billion, it may choose to do it in anyone of the following options:

1) 7-for-5 rights at RM1.00 each; or
2) 6-for-5 rights at RM1.17 each; or
3) 7-for-5 rights at RM1.40 each.

From the Table below, we can see that the 2nd option (known as Prop. B) matches the Maybank/DBS's rights issue in term of discount to the theoretical ex-rights price, while the 3rd option (known as Prop. C) matches the Maybank/DBS's rights issue in term of discount to the closing price. I believe TMI's management will likely to opt for 2nd option.



I am very keen on TMI, which has been severely bashed down in the current bear market. In the next bull market, I believe TMI's price performance may match the performance of the delisted Maxis in its heyday (between 2002 & 2007). I will put up a post on TMI shortly.

NOTE: PLEASE SEE THE NEXT POST ON TMI. I HAVE TO REVISE MY OPINION ON TMI AFTER A CLOSER EXAMINATION. THERE ARE A FEW RED FLAGS ON THIS STOCK.
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5 comments:

  1. MaxWealth88Friday, March 06, 2009 12:05:00 PM

    hi alex,

    thanks for your posting on this. some questions:

    1) what does it mean rights at 2.74 and theoretical ex price at 4.17. does it come with free warrants?

    2) what is your view on maybank rights issue? good to subscribe?

    thanks
    mbge7clt

    ReplyDelete
  2. aLanFriday, March 06, 2009 12:33:00 PM

    "...I believe TMI's price performance may match the performance of the delisted Maxis in its heyday (between 2002 & 2007)."

    Hi alex,

    I am anticipating your analysis, as I really wonder what advantage TMI has and how at least TMI can survive.
    Thanks.

    ReplyDelete
  3. Alex LuFriday, March 06, 2009 3:32:00 PM

    Hi Maxwealth88,

    I am a bit cautious on Maybank due to my concern about possible goodwill write-off (from the heapy price that it paid for its recent overseas acquisition). Nevertheless, I believe this has probably been priced into the stock by now.

    The Maybank rights issue does not come with any warrant.

    ReplyDelete
  4. Alex LuFriday, March 06, 2009 4:02:00 PM

    Hi Junk,

    I have to apologize for my volte-face on my earlier take on TMI. I have looked through TMI's accounts for 3Q2008 & 4Q2008 before as well as reading Kenanga's report on this stock. The stock was rated a BUY by Kenanga.

    On closer study of the 4Q2008 accounts, I was shocked by the deterioration in the results of TMI's Indonesian operation (and to some extent its Sri Lankan operation). The other thing that worried me is that TMI's financial position will still remain precarious even after the proposed Rights Issue has been completed. The amount to be raised via the Rights Issue is not adequate to put TMI in a firm footing. TMI hopes to selldown its stake in Excelcomindo as well as its tower assets in Indonesia (the latter is worth about USD1 billion) in order to boost its liquidity position. In the current depressed market, the planned sale of these assets will not fetch a good price. I doubt TMI will push for a sale any time soon.

    ReplyDelete
  5. MaxWealth88Thursday, March 12, 2009 1:20:00 PM

    hi alex,

    noticed that maybank continue to drop. is it still worthwhile to subscribe its rights or better wait until it is listed?

    thanks
    mbge7clt

    ReplyDelete