MAXIS (TP RM5.30-5.80– SUBSCRIBE) Initial Public Offering: The Return of the Jedi
We value Maxis, Malaysia’s largest mobile operator, at an equity value of RM39.8bn-RM43.5bn, implying a fair value of RM5.30-RM5.80/share. The valuation translates into 14.8x-16.2x CY10 EPS, and is supported by our DCF valuation of RM5.80 (WACC: 9%,TG: 1.5%). Investors are advised to subscribe to the offer in view of Maxis’ strong fundamental execution, superior EBITDA margin and robust prospective dividends going forward. Institutional investors would have strategic exposure to an index-linked heavyweight with a sound liquidity profile. While deprived of the longer term growth story with the overseas assets hived off, Maxis is a core holding for exposure to Malaysia’s mobile telecoms.