News Reuters reported that Maxis Communications Bhd
(“MCB”), a company controlled by tycoon Ananda Krishnan and owned 70% of Maxis
Bhd (“Maxis”), has disposed up to 375m or 5% of its Maxis stake worth around
RM2.4b (USD740.5m). No official announcement has been made by Maxis to Bursa Malaysia.
The shares are being
priced at a range between RM6.21-RM6.34 per share, representing a 3.2% discount
to yesterday’s closing price of RM6.54.
Comments The
buyer(s) of the above 5% Maxis stake is unknown at this juncture but we believe
that EPF, KWAP and Invesco, a foreign fund from US, may be one of the potential
buyers judging from the company’s latest shareholders movement list.
We suspect the
disposal may be related to Maxis’ India unit Aircel, which has targeted to
invest USD500m to deploy 4G services in 4QCY12.
We also do not rule
out that Ananda could have some bigger plans in mind that is prompting him to dispose
part of his Maxis share above.
There were also some
reports in mid-July speculating that Ananda may consider exiting Aircel and
Russian conglomerate Sistema JSFC was named as the potential buyer. The reason
cited for the probable exit from Aircel included the regulatory uncertainties in
India and an alleged probe on Ananda and other top officials over Aircel shares
purchase.
Outlook Maxis
remains as a solid high yield play given its firm 40.0 sen DPS in the next 1-2
years.
However, its ability
to maintain its market share remains doubtful at this juncture, in our
view.
There could also be
potential erosions in its EBITDA margin as a result of an aggressive rollout of
its FTTH plan.
Forecast No changes in our FY12-FY14 earnings
forecasts.
Rating Maintain MARKET PERFORM
The company’s current
strategy in focusing on customer retention instead of maintaining its margin may
add pressure to its near term financial performance.
Valuation Maintaining our Target Price at RM6.76 based
on a targeted FY13 EV/forward EBITDA of 11.4x (+1.5SD).
Risks Higher
than expected margin pressure.
Continuing loss in
market share to its peers.
Source: Kenanga
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