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Maxis is expected to pay 85% of net profit as dividends
By RISEN JAYASEELAN and LEONG HUNG YEE
PETALING JAYA: Maxis Bhd will likely pay out 85% or more of its net profit as dividends once listed, a source close to the company toldStarBiz.
“Maxis has sufficient cashflow to do so and when it pays these higher dividends, you can expect a re-rating of the sector,” he said.
Maxis’ draft prospectus states that the company is targeting a payout ratio of 75% of its net profit.
But Maxis has a track record of paying much more. In 2007, it paid out RM2.71bil in dividends, more than 100% of its net profit.
For the first six months of this year, Maxis reported earnings before interest, tax, depreciation and amortisation (EBITDA) of RM2.14bil.
Annualising this figure, Maxis’ full year EBITDA could be close to RM4.3bil.
Even if Maxis spends the estimated RM1.4bil in capital expenditure and other items such as interest payment for the whole year – which is what analysts expect – it still has considerable headroom to pay out more than 75% of its net profit.
Maxis reported a net profit of RM1.14bil for the first half of its financial year.
That Maxis will seek to pay high dividends also makes sense for major shareholders, T. Ananda Krishnan and Saudi Telecom Co, who will use the cash to fund growth in capital-intensive markets like India and Indonesia.
These shareholders may also use the listing proceeds to pay off some of the huge debts taken up for expansion into those markets.
Maxis’ higher dividends could mean higher yields and that, in turn, could make its shares more palatable to investors who seek safe, dividend-yielding companies to put their money in.
Retail investors though will have to accept the fact that only a small proportion of the public issue will be devoted to them.
Sources said Maxis was not changing the structure of its initial public offering (IPO) from what it had laid out in its draft prospectus.
Maxis plans to offer about 175 million shares, or less than 10% of the shares on offer, to retail investors. The bulk of the share offering – 2.075 billion or 92.2% of the issue – will go to institutions.
That had led to calls for Maxis to offer more shares to the public.
It is understood that the Securities Commission (SC) is satisfied with the structure of the offer (based on the draft prospectus), considering that it had met with the minimum public spread requirements.
“The SC will not interfere in the structure of an offering. It deems that to be purely a commercial decision.
“Besides, the SC has now moved into a full disclosure-based system and to prescribe beyond what the regulations require would be taking a step back,” said an industry player familiar with the situation.
Meanwhile, Maxis is said to be starting its book-building exercise for its international tranche this Friday. The book building for local institutions is ongoing.
A fund manager said Maxis was in discussions with a number of potential “cornerstone investors”, including the Employees Provident Fund.
It had been reported that Malaysian funds would buy almost half of the more than RM10bil Maxis offering, which is the country’s largest ever IPO.
It is understood that the latest indicative share price range for Maxis’ IPO starts from RM4.80, which is at the low end of analysts’ expectations and which could make its yields look more attractive.
Maxis is promoting itself as a pure dividend play which is poised for growth in the Malaysian market through data services.
“It has the most of the high-end cellular customers in Malaysia who are the target market for 3G type services,” an analyst said.
http://biz.thestar.com.my/news/story.asp?file=/2009/10/22/business/4952603&sec=business
PETALING JAYA: Maxis Bhd will likely pay out 85% or more of its net profit as dividends once listed, a source close to the company toldStarBiz.
“Maxis has sufficient cashflow to do so and when it pays these higher dividends, you can expect a re-rating of the sector,” he said.
Maxis’ draft prospectus states that the company is targeting a payout ratio of 75% of its net profit.
But Maxis has a track record of paying much more. In 2007, it paid out RM2.71bil in dividends, more than 100% of its net profit.
For the first six months of this year, Maxis reported earnings before interest, tax, depreciation and amortisation (EBITDA) of RM2.14bil.
Annualising this figure, Maxis’ full year EBITDA could be close to RM4.3bil.
Even if Maxis spends the estimated RM1.4bil in capital expenditure and other items such as interest payment for the whole year – which is what analysts expect – it still has considerable headroom to pay out more than 75% of its net profit.
Maxis reported a net profit of RM1.14bil for the first half of its financial year.
That Maxis will seek to pay high dividends also makes sense for major shareholders, T. Ananda Krishnan and Saudi Telecom Co, who will use the cash to fund growth in capital-intensive markets like India and Indonesia.
These shareholders may also use the listing proceeds to pay off some of the huge debts taken up for expansion into those markets.
Maxis’ higher dividends could mean higher yields and that, in turn, could make its shares more palatable to investors who seek safe, dividend-yielding companies to put their money in.
Retail investors though will have to accept the fact that only a small proportion of the public issue will be devoted to them.
Sources said Maxis was not changing the structure of its initial public offering (IPO) from what it had laid out in its draft prospectus.
Maxis plans to offer about 175 million shares, or less than 10% of the shares on offer, to retail investors. The bulk of the share offering – 2.075 billion or 92.2% of the issue – will go to institutions.
That had led to calls for Maxis to offer more shares to the public.
It is understood that the Securities Commission (SC) is satisfied with the structure of the offer (based on the draft prospectus), considering that it had met with the minimum public spread requirements.
“The SC will not interfere in the structure of an offering. It deems that to be purely a commercial decision.
“Besides, the SC has now moved into a full disclosure-based system and to prescribe beyond what the regulations require would be taking a step back,” said an industry player familiar with the situation.
Meanwhile, Maxis is said to be starting its book-building exercise for its international tranche this Friday. The book building for local institutions is ongoing.
A fund manager said Maxis was in discussions with a number of potential “cornerstone investors”, including the Employees Provident Fund.
It had been reported that Malaysian funds would buy almost half of the more than RM10bil Maxis offering, which is the country’s largest ever IPO.
It is understood that the latest indicative share price range for Maxis’ IPO starts from RM4.80, which is at the low end of analysts’ expectations and which could make its yields look more attractive.
Maxis is promoting itself as a pure dividend play which is poised for growth in the Malaysian market through data services.
“It has the most of the high-end cellular customers in Malaysia who are the target market for 3G type services,” an analyst said.
http://biz.thestar.com.my/news/story.asp?file=/2009/10/22/business/4952603&sec=business
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