Maxis- all maxed out

Maxis Bhd ('Maxis') prospectus has posted on Bursa's website (go here). This IPO will involved the listing of 7.5 billion Maxis shares on the exchange on November 19. On Page 21 of the Prospectus, we can see the Summary of Selected Financial & Operating Data for the company (see Table 1 below). You will see that Maxis reported a Net Profit of RM1.141 billion for 6-month ended 30/6/2009. Based on this, we can expect Maxis' Net Profit for FY2009 to be about RM2.282 billion. As such, Maxis share will have an EPS of about 30.4 sen. Based on the listing price of RM5.20 per share, the IPO is priced at a PE of 17.1 times.


Table 1: Maxis' Summary of Selected Financial & Operating Data

Maxis is very similar to Digi.com Bhd ('Digi') as both are involved in mobile telecommunication services in Malaysia only. Digi has just announced its results for 9-month ended 30/9/2009 yesterday (see Table 2 below). Digi ((closed at RM21.76 at the end of the morning session) is now trading at a PE of 16.8 times (based on the annualized EPS of 129.3 sen).


Table 2: Digi's latest 8 quarterly results

Based on the above, it is fair to say that Maxis' IPO is fully priced. While many investors maybe excited about Maxis' re-quotation on the exchange, it is hard to make a case for buying the stock. Funds managers, which have little choice but to own the stock, will buy it. Should retail investors buy this stock for dividend? Assuming Maxis pays out 90% of its earning, it would be pay a dividend of 27 sen (30.4 sen x 90%). At the IPO price of RM5.20, the dividend yield is about 5.2%. I guess that the only strong point I can make for owning the stock. I would prefer Axiata to Digi or Maxis anytime.