Business

Wednesday November 18, 2009

Strong interest expected in Maxis on its listing Thurs

By YEOW POOI LING


PETALING JAYA: Maxis Bhd shares are expected to attract buying interest when they make their debut tomorrow, as institutional investors may want to widen their exposure to stock which will be an index component from Friday.

Kumpulan Sentiasa Cemerlang director Choong Khuat Hock said Maxis shares were likely to see heavy trading as some fund managers might want to bump up their shareholdings, while those that had secured their allocated shares might take some quick profit.

“In the short to medium term, the share price is likely to appreciate and then move sideways,” he told StarBiz in a telephone interview.

In the longer term, investors would like to see if the telecommunications company (telco) could grow its earnings and execute plans to expand its broadband and 3G operations, Choong said.

A fund manager said the stock, without a doubt, would have an impact on the market as fund managers who benchmark their portfolio against the FTSE Bursa Malaysia KLCI would likely have Maxis in their holdings.

The share price would also be supported by the cornerstone shareholders, who have pledged to hold the shares for six months after the listing, he said.

The stock’s upside catalyst depends on the optimism of investors about Malaysia’s telco scene and Maxis in specific.

“Personally, I have a neutral outlook on the sector. The market conditions have changed since the privatisation of Maxis a couple of years ago. Today, Celcom and DiGi are stronger players in terms of fundamentals,” the fund manager said.

In the short term, Maxis shares might see some selling pressure as those who had secured their shares before the listing might consider “making a quick buck”, he added.

Bursa Malaysia indicated that Maxis would be eligible for fast entry into the FBM KLCI as the stock’s full market capitalisation was likely to exceed 2% of the full market value of the FBM EMAS Index.

The stock is expected to be the 11th largest on the benchmark based on investability weighting of 30% and listing price of RM4.75 per share.

Maxis is estimated to have a 2.7% bearing on the revised index while the telco sector will still be the third largest in the index, with a weightage of 11.5%.

TA Securities, in a report, said both local institutional and retail investors could snap up some Maxis shares on the open market due to the unexpectedly low allocation after the book-building process.

“As the market is known for attaching a certain level of premium for companies under T. Ananda Krishnan’s stable, Maxis is likely to attract fresh liquidity that could spill over into others stocks,” it added.

A local fund manager said competition in the broadband segment was accelerating with the entry of DiGi as well as other WiMAX holders, including Packet One Networks and the YTL group.

“It’s too early to tell if Maxis could meet the challenges. The management has to deliver on its promise to meet the dividend payout to shareholders,” he said.

In its prospectus, Maxis plans a 75% dividend payout of its annual earnings.


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