Axiata – Regional Mobile Champion

Axiata, the Malaysia leading Telecommunication Group has been our all time favorite stocks in Bursa Malaysia. Since the demerge exercise of TM & TMI (Axiata) back in 2009, Axiata has then begun its plan to become a Regional Mobile Champion. To date, Axiata classified as one of the most cheapest & high growth Telecommunication Group in Asia. Last month, Axiata once more crowned “Best Telecom Group of the Year” for the third consecutive year by Frost & Sullivan.

Axiata once entered it’s ‘dark’ time due to seemingly ‘overprice’ bought 15% of IDEA Telecom, forked out almost RM 6 billion to pair it’s shares in Spice Telecom after the merging of IDEA & Spice. Altogether, Axiata own 19% of IDEA. In financial year 2010, Axiata had reduced its investment value in IDEA for about RM 1 billion ringgit under impairment loss which lead Axiata fourth quarter 2010 into red.

With 100% share holding on Celcom (M) Berhad, Axiata seems far from it’s fair value. Although Celcom performance currently just below Maxis, most of FH valued Celcom only at around RM 25 – 30 billion which translated into RM 3.00 – 3.50 per share compare to Maxis market capital at RM 41 billion. 

Early this year, Celcom & Digi signed an MOU for Advanced Network collaboration which could see a saving of RM 2.2 billion for both companies in 10 years. The saving figure expected to be seen as early as Year 2012 from both Opex & Capex.

*Source OSK

*Source: OSK

Meanwhile, Axiata is currently sitting on ‘huge cash’ and considering no M&A activities in near term, most analysts expect a special dividend will be announced soon. The return of this excess cash estimated to be ranging from RM 0.60 – RM 1.00 per share.

In addition, mobile telecommunication companies are expected to benefit should government allow them to pass 6% service tax to their prepaid subscriber. This translated into an estimated of 3.5% of revenue and 8.5% profits boost for Celcom in 2011. Celcom is currently having 77% prepaid customer.

Below are latest target price for Axiata. The average target price for all 12 FH is currently at RM5.89 which is 16.4% above the stock closing on 15-Jul-11, at RM 5.06.

At current shares price (RM5.06), Axiata Market Capital is at RM 43 billion. Based on FY2010, Axiata PER was at 24 times and FY2011 forecast profit at RM 3.1 billion, it’s PER will be at only 13.6 times. No wonder most of FH (financial house) giving outperform & overweight call for Axiata shares. Telecommunication companies PER normally ranging from 17 - 20 times, with Maxis currently at 17.9 and Digi at 19.7 times. Given Axiata PER estimated at 17-20 times for it’s forecast FY2011 which at RM 3.16 billion, Axiata stock prices might shoot up between RM 6.32 to RM 7.44 in Year 2012.

Bumi Armada IPO final price at RM 3.03



Bumi Armada announced today it’s IPO price at RM 3.03, 12 sen or 3.8% below it’s original IPO price. This bring Bumi Armada market capitalization of RM 8.87 billion after listing and PER of 25 times. The company set to rise RM 1.95 billion from the IPO exercise.

A total 614.632 million shares application received for 58.569 million shares available for retail subscription, represent 9.5 times. To be exact, Bumiputera application oversubscription by 5.19 times and Public application oversubscription by 13.8 times the allocated shares.

Details of the shares allotment for retail applications are as per below :



Source: Malaysia Issuing House



Source: Malaysian Issuing House


 

 







BUMI ARMADA IPO at RM 3.15 –Year 2010 PER at 26 !!

Few days ago, Bumi Armada have publicly announced it’s IPO and target to be listed on 21-Jul-2011. At retail offer price of RM 3.15 Bumi Armada market capital would be at RM 9.2 billion upon listing.

A bit on the company’s background, Bumi Armada was formed in 1995 and previously listed on Bursa Malaysia on 25-Jun-2011. On 18-Apr-2003, the company decided to be delisted prior to restructuring plan in Year 2005.

Bumi Armada provide offshore services via 4 business units which are, FPSO, OSV, T&I and OFS and 2 support units namely FMS and EPC.

Details of the offering are as follow :

         i.            Retail Offering   - 79,861 million shares

a.       Malaysian citizen                              : 58.569 million shares

b.      Directors & eligible employees         : 21.292 million shares

       ii.            Institutional Offering - 798,677 million shares

IPO Summary

On 20-Jun-2011, Bumi Armada entered into master cornerstone investors placing agreement of 300 million shares which represent 10.24% of the enlarge issued & paid up after the IPO exercise.

Final retail price will be determined after the Institutional Price fixed on the Price determination date and will be the lower of

         i.            Retail Price of RM 3.15 per share

       ii.            The institutional Price

Institutional price will be determined by a bookbuilding process wherein institutional investors were invited to bid for portions of the offering by specifying the number of IPO shares and price they would prepare to acquire. Bookbuilding process commenced from 28-Jun-2011 to 8-Jul-2011. From there, Institutional Prices will be fixed.

Market talk has been rife that Bumi Armada’s IPO has garnered strong interest from foreign and local institutional investors, with sources disclosing that the company saw its institutional offer 5.6 times oversubscribed on the first day its bookbuilding exercise.

For the financial year ended Dec 31 2010, Bumi Armada posted total revenue of RM1.24 bil and profit of RM350.1 mil, compared with a turnover of RM732.1mil and net profit of RM277.4mil for FY09. 84.8% of its revenue for FY10 were derived from outside Malaysia.

Financial Year Summary