Showing posts with label maxis. Show all posts
Showing posts with label maxis. Show all posts

Thursday 30 August 2012

Maxis - Return on Retained Earnings

Maxis
Year DPS EPS Retained EPS
2002
2003
2004
2005
2006
2007
2008
2009 0 21 21
2010 39 30.6 -8.4
2011 40 33.7 P -6.3
2012 40 E 29 F -11
Total 119 114.3 -4.7
From 2009 to 2012
EPS increase (sen) 8.0
DPO 104%
Return on retained earnings  -170%
(Figures are in sens)

Friday 22 June 2012

Investor's Checklist: Telecom

Shifting regulations and new technologies have made the telecom industry far more competitive.  Though some areas are more stable than others, look for a wide margin of safety to any estimate of value before investing.

Telecom is a capital-intensive business.  Having the resources to maintain and improve the network is critical to success.

Telecom is high fixed-cost business.  Keeping an eye on margins is very important.

Watching debt is also important.  Firms can easily overextend themselves as they build networks.


The price of wireless airtime is plummeting.  Carriers continue to compete primarily on price.


Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey



Read also:
Investor's Checklist: A Guided Tour of the Market...

Friday 14 May 2010

Investor's Checklist: Telecom Sector

The telecommunication sector is filled with the kinds of companies we love to hate:
  • They earn mediocre (and declining) returns on capital, 
  • economic moats are nonexistent or deteriorating, 
  • their future depends on the whims of regulators, and 
  • they constantly spend boatloads of money just to stay in place.  
Even companies that once boasted wide moats, such as those that control the local phone network, face increasing competition from newer players, such as cable and wireless networks.  Because telecom is fraught with risk, we typically look for a large margin of safety before considering any telecom stock.

Telecom Economics

Building and maintaining a telecom network, whether fixed line or wireless, is an extremely expensive endeavor that requires truckloads of upfront capital.  This requirement provides a substantial barrier to entry and usually protects the established players.  To raise capital, a new entrant must have a great story to tell investors.  The emergence of the Internet, the opening of local networks to competition, and rapid wireless growth during the 1990s gave numerous new players the yarns they needed, which is why the usual barrier provided by huge capital requirements came crumbling down as investors lined up to grab a piece of the action.

While the effects of this massive infusion of capital are still being felt in the industry, ongoing capital needs have sunk many new entrants.  Even a mature telecom firm will need to invest significant capital to maintain its network, meet changing customer demands, and respond to competitive pressures.

Because of the enormous cost to build a network, carriers typically have very low ratios of sales to assets (asset turnover ratios).  Even a mature carrier typically generates only around $1 per year in sales for each $1 of assets invested.  But building a business of ample size to support interest payments and ongoing capital needs is very important.  Because fixed costs are so high, it's imperative for carriers to have enough customers over which to spread the costs.

Squeezing as much profit from the sale as possible is also crucial.  While size again plays a role here, a telecom company must be able to send bills, provide customer service, maintain the network, and market services efficiently.  A mature company, either fixed line or wireless, should expect to earn operating margins between 20 percent and 30 percent.  Short of this level, it is extremely difficult to earn an attractive return on invested capital, given the slow pace at which assets turn over.

With so many companies raising money and building networks in the late 1990s, the volume of business needed to support all these huge investments never materialised.

Conclusion:

The telecom sector of tomorrow will look nothing like the sector of the past.  Competition is far greater throughout the industry and economic moats exceedingly difficult to come by.  The future of the industry will be shaped by regulatory and technological changes, which means that financial strength and flexibility are likely to be what separate successful firms from unsuccessful ones over the next few years.

Investor's Checklist:  Telecom
  • Shifting regulations and new technologies have made the telecom industry far more competitive.  Though some areas are more stable than others, look for a wide margin of safety to any estimate of value before investing.
  • Telecom is a capital-intensive business.  Having the resources to maintain and improve the network is critical to success.
  • Telecom is high fixed-cost business.  Keeping an eye on margins is very important.
  • Watching debt is also important.  Firms can easily overextend themselves as they build networks.
  • The price of wireless airtime is plummeting. Carriers continue to compete primarily on price.


The Five Rules for Successful Stock Investing
by Pat Dorsey

Thursday 18 March 2010

Astro to go private at RM4.30 a share






Astro to go private at RM4.30 a share

Published: 2010/03/18
Shareholders stand to get a 21 per cent premium to the stock's last traded price of RM3.56.

Tycoon T. Ananda Krishnan, Khazanah Nasional Bhd and partners have offered to buy out minority shareholders of Astro All Asia Networks plc in a cash deal that values the pay-television operator at RM8.5 billion.

Shareholders stand to get RM4.30 (5076) for each share held, which is a 21 per cent premium to the stock's last traded price of RM3.56.

The offer was made late yesterday by special purpose vehicle Astro Holdings Sdn Bhd, whose main shareholders are Ananda's Usaha Tegas Sdn Bhd and affiliates, Khazanah and Bumiputera foundations. Together, they own 72.9 per cent of Astro.

The company does not intend to keep Astro listed and, if all goes well, it will be delisted sometime in the middle of June, said CIMB Investment Bank, the adviser to Astro Holdings.
The move to take Astro private is to facilitate plans to make it a leading regional integrated media group.

Astro needs to spend substantially - between RM3 billion and RM3.5 billion over the next three years - to accelerate its domestic and international growth, inclu-ding in migrating to high-definition television, said Datuk Seri Nazir Razak, group chief executive of CIMB Group Holdings Bhd, which owns CIMB Investment.

The substantial investments would strain the company's gearing and limit its ability to pay dividends, he added.

"A private status would give us greater flexibility to achieve this goal of expansion. We believe the deal offers minority shareholders an attractive price while not subjecting them to the associated risks of the company's next growth phase," Nazir told reporters at a briefing late yesterday.

Taking it private will also let the owners have more freedom in making corporate decisions without having to seek shareholders' approval.

The reasons for the exercise were similar to that cited when another of Ananda's companies, Maxis Communications Bhd, was taken private in 2007.

Maxis, after being privatised, took on a foreign partner in the form of Saudi Telecom, and a revamped version of the company, comprising only the domestic operations, was listed just last year.

Nazir said a relisting of Astro would be considered once it achieved a more stable earnings profile.

The Astro privatisation will go through if there is acceptance of more than 90 per cent of the shares.

Astro Holdings will have to come up with some RM2.4 billion to buy the minority portion. CIMB is leading a consortium of banks to arrange the financing.

Nazir is confident the deal will go through as the offer price is "fair", coming in above analysts' average targets of about RM3.70 for the stock.

"It's a good price. I think they'll have no problems taking it private," said Yeonzon Yeow, head of research at Kenanga Research, which had a target price of RM3.65 for Astro.

RHB Investment Bank Bhd and UBS Securities Malaysia Sdn Bhd are the advisers to Astro in the deal, while the independent financial advisers are Public Investment Bank Bhd and JPMorgan Securities (Malaysia) Sdn Bhd.

Meanwhile, Astro chairman Datuk Badri Masri said the company would continue to be managed by the current board and management.

Astro owns 20 per cent of India's Sun Direct TV, a direct-to-home service which is still loss-making, as well as businesses in China (library and content development) and a new Internet Protocol television initiative in Australia, the Middle East and North Africa.














The Business Times


---


Ananda leads buyout for Astro

KUALA LUMPUR, March 17 — Billionaire Ananda Krishnan is leading a US$2.57 billion (RM8.7 billion) buyout offer for pay-TV monopoly Astro All Asia Networks plc after loss-making overseas expansion bled the company.
Astro today said it has received an offer from Astro Holdings, a special purpose vehicle controlled by Ananda and state investment firm Khazanah Nasional, to buy out the remaining 28 per cent of shares in the company at RM4.30 a share.
The offer marks a 21 per cent premium to Astro’s market value of US$2.08 billion or its last price of RM3.56 a share before trading in the shares were suspended on Monday.
Ananda owns 42.4 per cent of Astro while Khazanah Nasional has a 21.4 per cent stake in Astro.
The Employees Provident Fund (EPF), the country’s biggest pension fund, has a 7.37 per cent stake in Astro. The EPF is not a shareholder of Astro Holdings, the offer.
The privatisation will allow Astro to focus on its overseas operations which still require heavy capital investment, Astro Holdings said.
“As a public listed entity, substantial capital requirements needed for its growth plans may potentially strain the cash flow position and may impair Astro,” it said in a statement.
“A relisting would certainly be considered when Astro achieves a more stable earnings profile,” Astro Holdings said.
Despite its hugely profitable Malaysian operations, Astro posted a net loss of RM529 million in fiscal 2009, dragged down by massive losses at its overseas operations in Indonesia and India.
Astro owns 20 per cent of India’s Sun Direct TV while its Indonesian pay-TV joint venture has fallen apart since 2008 due to a contract dispute.
The offer by Astro Holdings today is a replica of a 2007 deal by Ananda which involved the delisting of top telecoms company Maxis Communications Berhad following a series of expensive acquisitions in India and Indonesia.
Ananda, ranked by Forbes magazine as Asia’s 14th richest man with a net worth of US$7.6 billion, last year cheered investors when he relisted his prized Malaysian telecommunications assets on the local bourse in a US$3.3 billion offering.
The delisting of Astro shares from the stock exchange may benefit its closest rival Media Prima, a free-to-air broadcasting monopoly.
CIMB Investment Bank, the lead advisor for the deal, expects the privatisation of Astro to be completed by mid-June.
“By taking Astro private, (Ananda) would have more freedom in taking corporate actions without having to seek shareholders approval,” TA Securities said in a research note before the privatisation announcement. — Reuters

Thursday 25 February 2010

Malaysia's Maxis 2009 profit misses estimate

Thu Feb 25, 2010 5:19pm

* Q4 net profit 503 mln rgt vs 668 mln rgt Nomura estimate

* FY net profit 1.6 bln rgt vs 2.4 bln rgt consensus estimate

* Says optimistic about Malaysian telecoms market

* Shares end up 0.6 pct at 5.52 ringgit ahead of results



KUALA LUMPUR, Feb 25 (Reuters) - Malaysia's leading mobile phone service provider Maxis Berhad (MXSC.KL: Quote, Profile, Research) reported lower quarterly profits on Thursday, hit by higher finance charges and expenses related to its listing last November.

Maxis, which debuted on the stock exchange as Southeast Asia's biggest initial public offering last year, said it is optimistic about growth in the telecommunications market after adding 556,000 new subscriptions in the fourth quarter.

"Despite the entry of a number of new players in the market, and maintaining a large subscription base, the company recorded another year of over 50 percent EBITDA margin," said Sandip Das, Maxis' chief executive officer. Maxis reported October-December net profit of 503 million ringgit ($147.8 million) against 615 million ringgit in the third quarter.

Analysts generally do not provide quarterly earnings forecasts for Malaysian companies, but Nomura put its estimate for Maxis' fourth-quarter net profit at 668 million ringgit.

The company made a net profit of 1.6 billion ringgit for the full year, missing the 2.4 billion ringgit consensus estimate of 19 analysts tracked by Thomson Reuters StarMine.

Maxis is valued at 41.2 billion ringgit ($12.1 billion), making it the biggest mobile provider by market capitalisation in Malaysia, the second most developed mobile market in Southeast Asia after Singapore.

It competes with smaller rivals like Axiata (AXIA.KL: Quote, Profile, Research) and DiGi (DSOM.KL: Quote, Profile, Research) and controls 40 percent of the local mobile phone market.

Axiata, Malaysia's No.2 mobile telecoms provider, posted better-than-expected 2009 net profit on Wednesday but said competition was heating up in its key markets. [nSGE61M079]

Eleven out of 21 analysts tracked by Thomson Reuters I/B/E/S have "hold" ratings on Maxis, with six calling it a "buy" or "strong buy", two rating it a "sell" and two others rating it an "underperform".

Shares of Maxis were up 3 percent so far this year, outperforming the 0.3 percent gain in the broader market index .

($1=3.403 Malaysian Ringgit)

(Reporting by Julie Goh; Editing by Soo Ai Peng)

http://in.reuters.com/article/technology-media-telco-SP/idINSGE61M07O20100225?sp=true

Sunday 25 October 2009

Maxis May Raise Up to 12.4 Billion Ringgit in IPO

Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.

-----

Maxis May Raise Up to 12.4 Billion Ringgit in IPO (Update2)

Share | Email | Print | A A A

By Soraya Permatasari

Oct. 23 (Bloomberg) -- Maxis Communications Bhd., Malaysia’s biggest mobile-phone operator, may raise as much as 12.4 billion ringgit ($3.7 billion) in the country’s largest initial share sale, according to an e-mail sent to investors.

The Kuala Lumpur-based phone operator’s shareholders will sell as many as 2.25 billion shares at 4.8 ringgit to 5.5 ringgit apiece next month, lead arranger CIMB Investment Bank Bhd. said in the e-mail. That would value the company as much as 41.25 billion ringgit.

The sale, more than double Petronas Gas Bhd.’s record 1995 offering, would give billionaire Ananda Krishnan funds to invest in faster-growing markets as wireless demand slows at home, where mobile subscriptions exceed the nation’s population of 28 million. The shares are being offered as equity markets from Malaysia to China to India climb back to levels preceding the bankruptcy of Lehman Brothers Holdings Inc.

“As it will likely be added into the benchmark index, fund managers would have no choice but to look at Maxis and to add it into their portfolio,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. “It will help boost the market in terms of the depth, being such a big cap stock.”

Institutional Investors

The indicative price range values the stock at 16 to 18 times estimated earnings, making Maxis expensive relative to rivals such as Digi.com Bhd, according to Scott Lim, chief executive officer of MIDF Amanah Asset Management Bhd. in Kuala Lumpur. Stocks on the MSCI Asia Pacific Telecommunication Services Index trade an average of 13 times estimated earnings.

“The offer is also a bit pricey compared with regional valuations,” Lim said. “Foreign fund managers may not be interested and they would rather buy a similar stock somewhere else.”

The stock will be priced on Nov. 10 and start trading on the Malaysian exchange Nov. 19, according to the e-mail.

About 2 billion shares, or 91 percent of the total, are being offered to institutional investors, while about 150 million, or 6.7 percent of the total, will be sold to the public, according to the e-mail. Maxis will start marketing today in Hong Kong, followed by Singapore on Oct. 26 and Oct. 27, and Kuala Lumpur from Oct. 28 to Oct. 30, it said.

Europe, U.S. Presentation

Presentations of the sale in Europe and the U.S. will be from Nov. 2 to Nov. 9. Malaysia’s biggest funds, including the Employees Provident Fund, may take up almost half of the stock offering, a person with knowledge of the matter, told Bloomberg this week.

Lembaga Tabung Haji, which manages about 23 billion ringgit of Islamic pilgrim funds in Malaysia, is considering the offer as long as the price doesn’t exceed 5.20 ringgit a share, Chief Investment Officer Mohd Noor Abdul Rahman said yesterday.

The phone carrier will only include local operations in the sale, potentially discouraging foreign investors because Maxis already controls 40 percent of the Malaysian market, in which handsets outnumber people.

Maxis was among the country’s four biggest companies by market value before billionaire Krishnan, 71, took it private in 2007 in a 16 billion ringgit transaction.

Mobile-phone penetration in Malaysia exceeded 100 percent in March, according to the Malaysian Communications and Multimedia Commission.

Mobile Subscribers

Maxis had 11.4 million mobile-phone subscribers as of June 30, according to the initial prospectus. The company reported 4.24 billion ringgit of revenue in the six months to June 30.

Today’s price range for the shares values Maxis at 36 billion ringgit to 41.25 billion ringgit. That compares with Maxis’s 2007 market value of 40 billion ringgit before it was taken private. The 2007 valuation includes the company’s overseas operations, which are now excluded.

Krishnan is Malaysia’s second-richest person, with an estimated $7 billion of wealth, according to Forbes magazine.

Krishnan, whose family originated from Sri Lanka, was born April 1, 1938 in Brickfields, Kuala Lumpur. He also owns Astro All Asia Networks Plc, Malaysia’s biggest pay television operator, which this month secured a three-year agreement with the FA Premier League for exclusive rights to broadcast Barclays Premier League football matches in the country.

Krishnan took Maxis private in 2007 in a 16 billion ringgit buyout deal in a bid to accelerate expansion in India, where it owns Aircel Ltd., and in Indonesia, hoping to seek growth outside the maturing Malaysian market. He promised to re-list Maxis in there years.

The decision to re-list Maxis this year came after Prime Minister Najib Razak in July said Maxis should re-list to attract investors to the Malaysian stock exchange.

To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net

Last Updated: October 23, 2009 02:42 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aifzm6xbxmlA

Monday 19 October 2009

Maxis prepares to relist in Malaysia's largest IPO ever

Maxis prepares to relist in Malaysia's largest IPO ever
By Anette Jönsson | 15 October 2009

Two years after being taken private, Maxis will relist the domestic portion of its business, offering investors a high-quality yield play.

The Malaysian stockmarket is getting ready for its largest initial public offering ever and it is a familiar face that will be rejoining its ranks. Just over two years after Maxis Communications (MCB) was privatised by its controlling shareholder, Malaysia's largest provider of mobile communication services is about to return with an IPO that looks set to raise about $3 billion.

Like most other companies that are relisted following a privatisation, however, it is a smaller and more streamlined company that is currently being pre-marketed. Most notably, the company's mobile businesses outside Malaysia -- primarily the mobile operations in India and Indonesia -- will stay with the unlisted parent company. The change is signalled by the fact that the unit preparing for a listing is named Maxis Berhad, while Maxis Communications will remain a private entity that will hold the international businesses as well asa controlling stake in Maxis Berhad (from here on referred to as Maxis).

Sceptics have noted that Maxis is the portion of the company that remains after the high-growth businesses in India and Indonesia has been taken out, suggesting that this will be a much less exciting business than it was before it was taken private in June 2007. This is indeed true -- at least with regard to the removal of the fastest growing portions of the business -- though the feedback from domestic investors, in particular, suggests there are still reasons to be excited.

Sources involved in the offering note that, before the privatisation, investors were not that keen on the international business, which they saw as a drain on the company's cashflow. Indeed, much of what the company was earning from the steady and cash-generative domestic operations went straight into the funding of its overseas expansion, leaving shareholders with few benefits and a lot of execution risk.

A similar argument is outlined by Maxis in the preliminary listing prospectus as it lists the reasons behind the buyout and de-listing: The principal shareholder at the time, Ananda Krishnan-controlled Binariang, believed that the overseas expansion [existing and future] "would significantly change the financial and risk profile of MCB due to uncertainties surrounding the investment and regulatory environments in new markets, the substantial capital expenditure required, which may strain MCB's cashflow and dividend payment capability, and the increase in gearing to finance such...investments in new markets, which may result in higher borrowing costs."

"As such, Binariang undertook the privatisation of MCB as it believed that private ownership would accord greater flexibility for MCB to realise its vision to be a leading telecommunications company and to adopt a capital structure consistent with the change in its funding and risk profile," Maxis said.

"Previously the minority shareholders didn't get much of the yield. Now, the interests of the parent company and the minority shareholders are aligned," said one source, noting that Maxis has promised to pay out 75% of its annual earnings as dividends. "The company is giving the market what it wanted two years ago."

What investors who buy into the restructured listing candidate will get is a company with a leading position in the domestic market and very strong cashflow generation -- the free cashflow yield is estimated at 6%-7%. Given its size, Maxis will also be a bell-weather stock in the Malaysian market and is expected to go into all the benchmark indices, meaning investors who follow Malaysia or the telecom sector will pretty much have to buy it. Meanwhile, domestic investors are already well-familiar with the company and its ability to make money.

That should ensure a successful IPO at least, but that is not to say that Maxis will be an instant hit once it starts trading. Malaysia is a mature mobile market with a 100% penetration rate and while Maxis is the dominant player with a 46% share of the post-paid market and 38% of the pre-paid subscriptions, it does have competition from the number two and three players -- Celcom, which is owned by Axiata (formerly TM International), and DiGi.

"People don't question the quality [of Maxis], they question the growth and how much competition there is in the market," said the earlier quoted source.

The level of competition will be of particular importance in the wireless broadband segment of the market, which is viewed as a key growth area, particularly in light of the fact that 50% of the Malaysian population is estimated to be younger than 25. The country already has 15.9 million internet users and, over the past three years, they have increasingly started to access the internet through various mobile and wireless devices.

However, in a sense, the Malaysian telecom market is less competitive than other Asian markets as the key players have been expanding overseas and, just like Maxis did in its previous reincarnation, they use their domestic operations to fund this expansion. As a result, the Malaysian telecom operators have refrained from price wars that may have had a negative impact on their cashflow and margins. Aside from the mobile business, Maxis also offers fixed-line and international gateway services.

Maxis will be offering 30% of the company, or 2.25 billion shares, all of which are existing shares sold by MCB. About 7.8% of the deal will be earmarked for retail investors and another 50% will be offered to Malaysian investors recognised as Bumiputras (indigenous investors). The remainder will be split between other domestic institutional and international investors. Reducing the number of available shares even further, sources say the company is in discussion with a number of potential cornerstone investors.

Because of its greater market share, analysts argue that Maxis should trade at a premium to DiGi and Axiata, which indeed it did when it was listed as MCB. DiGi, which is viewed as the closest comparable because most of its businesses are in Malaysia, currently trades at a 2010 enterprise value-to-Ebitda multiple of 7.3 and at a price-to-earnings ratio of 14.9 times. Analysts estimate its free cashflow yield at 6.8%.

Axiata, which aside from Malaysia also has mobile operations in Indonesia, Cambodia, Mauritius, Thailand, Sri Lanka, Bangladesh, Pakistan, Iran and Singapore, trades at a 2010 EV/Ebitda multiple of 7, a P/E ratio of 16.8 times and at a free cashflow yield of 4.5%.

While Maxis will only set the price range ahead of the formal roadshow, which is scheduled to kick off on October 23, there is a maximum price of M$5.50 per share attached to the Bumiputra tranche. That price would value Maxis at an EV/Ebitda multiple of 9.6 and a P/E multiple of 16.5 and would imply a free cashflow yield of 6.2%.

A price of M$5.50 per share would also suggest a deal size of M$12.4 billion ($3.6 billion). That will be more than double Petronas Gas's $1.1 billion IPO in 1995, which still ranks as the country's largest listing, according to Dealogic. Maxis Communications' own IPO in 2002 raised $803 million, which makes it the second largest.

Maxis' final price is expected to be fixed in the week of November 9 and the shares should start trading by mid-November. CIMB, Credit Suisse and Goldman Sachs are joint global coordinators and joint bookrunners for the offering, with J.P. Morgan, Nomura and UBS joining them at the bookrunner level.

http://www.financeasia.com/article.aspx?CIaNID=114764