Proposed private placement ‘fine tuning’ for Maxis’ earnings
KUCHING: Maxis Bhd, has fixed its private placement shares price at RM5.52 per share.
In a filing to Bursa Malaysia yesterday, the company said the price is a discount of 9.24 per cent to the volume weighted average price of RM6.0819 of the company’s shares for the five trading days up to, and including last Friday, and a discount of about 6.12 per cent to the closing price of RM5.88 on last Friday.
“Based on 300 million placement shares, the gross proceeds to be raised from the private placement is about RM1.656 billion,” it said.
Maxis’ proposed private placement has led to analysts ‘fine tuning’ their earnings per share (EPS) forecasts while others have maintained their estimates at this juncture.
AmInvestment Bank Bhd’s (AmInvestment Bank) financial year 2017 to 2019 forecast (FY17FFY19F) EPS forecasts have been fine-tuned for Maxis’ proposed private placement of 300 million new shares.
Assuming the placement price at RM5.50 per share, the research firm estimated that the interest cost savings at an average rate of five per cent from the RM1.6 billion proceeds would mostly offset the EPS dilution arising from the four per cent expansion of Maxis’ share base.
“However, the group’s FY17F net debt/earnings before interest, tax, depreciation and amortisation (EBITDA) would improve from 1.8- fold to 1.5- fold, which the announcement indicated would provide the sufficient leverage to
Based on 300 million placement shares, the gross proceeds to be raised from the private placement is about RM1.656 billion. Maxis
fund improvements to its service quality and prepare for future spectrum assignment fees, mainly the much sought-after 700MHz band and subsequently, the refarming of the 2600MHz band,” AmInvestment Bank said.
On the other hand, the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) maintained its earnings estimates at this juncture.
“Should Maxis successfully completed the proposed private placement exercise, both FY17F and FY18F EPS will be adjusted lower by approximately four per cent,” MIDF Research said.
This will reduce its target price to RM5.89 per share.
As highlighted in the past, AmInvestment Bank continued to caution that Maxis may also opt to reduce the group’s dividend payout, which declined to 75 per cent in the first quarter of FY17 (1QFY17) and FY16 from 86 per cent in FY15.
For now, the research firm maintained its dividend per share (DPS) assumptions, based on 65 per cent of Maxis’ free cash flows, which translate to a reasonable yield of three per cent.
“The revenue trajectory for Maxis remains unexciting given the continued price wars being waged by its peers,” the research firm said.
“Against the backdrop of high rotational churn and price- focused competition, manag ement maintains its guidance for a FY17F flat normalised EBITDA.”
AmInvestment noted that since 2Q15, Maxis’ prepaid subscriber base has fallen by 1.2 million or 12 per cent with no end in sight yet for the haemorrhage.