Friday, October 30, 2009

Maxis... again

One of the more common misconception about the re-quotation of Maxis on our exchange is that it is attractive as the retail IPO price for the re-quotation of Maxis at RM5.20 apiece is lower than the price of RM15.60 apiece that Ananda Krishnan paid to take it private in 2007. Before we examine this issue, let's refer to the Maxis that was privatized in 2007 as Maxis 2007 & the new Maxis to be listed as Maxis 2009.

Maxis 2007 was listed on the exchange in 2002 with the retail IPO price was RM4.36. In 2007, Ananda paid RM17.5 billion to acquire the remaining 53.3% of Maxis 2007 that he did not own (or, at a price of RM15.60 per share). This deal valued the entire company at RM32.9 billion. Maxis 2007 consists of the Malaysian operation and two overseas operation, i.e. a 74%-stake in Aircel Ltd, India and a 95%-stake in PT Natrindo Telepon Seluler, Indonesia.

Maxis 2009 has a capital base of 7.5 billion shares (compared with 2.1 billion shares for Maxis 2007 at the point of privatization). The retail IPO price is RM5.20 per share- valuing the company at RM39.0 billion. Maxis 2009 is a purely Malaysian telco play. The Indian & Indonesian operations have been stripped off and joined Ananda's private group of companies.

So, Maxis 2009 is valued at 18.5% higher than Maxis 2007 and it does not come with Indian & Indonesian operations. While not discounting the possibility that Maxis may surprise us on the upside in the years to come, we must accept the fact that Maxis 2009 as offered is anything but cheap. If you buy into this stock, you must be prepared to hold it for long term.


Unknown said...

makes sense to me,
thats why epf went for it big time
for us small timer, it looks expensive

macondo said...

The PE is high for a stock/sector on course to becoming a utility / dividend play. There's growth potential in the market, but there's also the prospect of a significantly more fragmented and competitive environment on the data side. Malaysian pricing for voice and particularly data are on the upper end relative to regional peers, suggesting that growth will have to come from (the cost of) growing the market while service margins continue to decline.