Didn’t get Maxis IPO Shares? Stop Sulking, Be Happy



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Nov 12 2009
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Much has been written about how unfair it was in the Maxis relisting IPO shares allocation. To recap the horror story, existing Maxis shareholders (that’s Ananda Krishnan and his geng) agreed to give up 30% of their share for the purpose of the IPO of which a whopping 27.67% was to be allocated to institutional investors while Average-Joes were allocated a merely 2.33%. After the book-building exercise Maxis Berhad has set the price of the IPO at RM4.75 per share while institutional at RM5.00 a share – raising RM11.2 billion from the 2.25 billions shares to be floated in the local stock market this coming 19 Nov 2009.AAPL, stock) and Ananda Krishnan is Steve Jobs. If the underwriters didn’t tell you such fairy tales then they need to take up the remaining unsubscribe shares so it was their job to tell you so.

Now, many are crying over the small retail portion allocated from this IPO, something which is understandable considering that it’s not everyday you have the opportunity to be part of the minority shareholders of such an established company. Many former Maxis shareholders still remember the huge profit they made (RM15.60 a share during Maxis privatization in June 2007) from their initial investment in Maxis’s first IPO hence they expect the same may happen from this second round of Maxis IPO.

Maxis IPO Share Allocation

Well, it’s hard to imagine Maxis were to re-privatise again in the near future but anything is possible considering political climate in Malaysia. If it’s alright to broker top judges’ appointment, kill innocent people before pushing them out of the building, plunder the nation of billions of dollars in project such as PKFZ and whatnot, you can’t blame investors when even local business owners lost confidence and relocated their monies elsewhere, what more with foreign investors. Hence it was hope that Maxis relisting will bring back the foreign investors’ confidence (and their hot money) into the country.

Anyway if you didn’t’ get any Maxis IPO shares due to the limited retail portion, do not get too sad and start crying like a baby who losses his / her pacifier. As have mentioned many times, Maxis today is a different animal and the upside is not the same as when it was listed the first time. Do I really have to re-mention the word “saturated” again? Sure, non of Maxis top management will tell you this and they will keep telling you there’re more spaces of growth (otherwise who in their right mind would buy their shares?). Underwriters told you the same story as if Maxis is another Apple Inc. (Nasdaq:

Of course there’re still some upsides to the initial IPO price of RM4.75 upon listing because people who didn’t manage to get a single share would be chasing the stock because they’re buying for its dividend. The stock price may go up to RM6.00 a share easily because institutional investors are not about to sell on the first day of listing, at least not the so-called cornerstone investors who had promised not to sell within 6-months from the listing date. Funds such as EPF (Employees Provident Fund) and PNB (Permodalan Nasinal Berhad) who relies heavily on dividend stocks as their return to the members will not sell and this will contribute to price surge should retailers decide to chase the stock further.

Apple Total Cash

Maxis IPO price of RM4.75 also means it was priced at 15.83 multiple times of the company financial year 2009’s 30 sen EPS. At RM6.00 a share the stock will be trading at an EPS of 20 times and this is expensive considering the saturation in the mobile telecommunication sector. The local and global stock markets are currently at the junction whereby the economy recovery is still questionable. Hence if you were to chase the stock you may be buying at the highest. Don’t try to buy for the sake of buying or out of revenge just to show that you’re also belong to the Maxis shareholders group. Take your time and wait for the right time to buy at a later stage (price consolidation). Hey, it could be blessing in disguise because you didn’t get a single share out of Maxis IPO. Who knows, maybe Maxis share price will not venture too far away from its’ RM4.75 a share. If you’re too loaded with cash why not go and invest in stocks such as Apple Inc.? Stop sulking and invest your hard-earned money another day.

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Comments

apple… man… that's expensive!i am going for GE… 🙂

I think everyone should own a little apple in their portfolio…at least for now. Thanks for the insights.

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