Maxis Bhd, the country's largest mobile operator, will come under the spotlight tomorrow when its shares are relisted on Bursa Malaysia after two years.
Although its path to a relisting has not been smooth, most investors are expected to put their "issues" aside and try to get a piece of the stock.
"It is hard to ignore Maxis. Fund managers would want a piece of Maxis, as it would be included as a KLCI component stock. They can't afford to lose out," said an analyst who declined to be named as his firm is partly involved in the Maxis relisting exercise.
In the events leading up to its relisting, some institutional investors were reportedly unhappy over the amount of Maxis shares allocated to them. In some cases, they were allocated only 5 per cent of what they have initially applied for.
Sources said insurance funds were given slightly higher allocation, as they are unlikely to sell the shares over the short term.
Maxis will raise over RM11 billion in the initial public offering (IPO), touted to be the largest in Southeast Asia.
Maxis chose to list its shares at a time when mobile penetration is saturated and the mobile market is flooded with new players like Tune Talk and XOX.
With 100 per cent of the population owning a handset, it would mean that operators need to grow their earnings by encouraging existing customers to spend more and to win over new customers from theirs rivals.
When competing in a matured market, analysts expect operators to register single-digit revenue growth.
Despite this challenging landscape, analysts' concerns are somewhat cushioned by Maxis' pledge that it will return 75 per cent of its net profit to shareholders as dividend.
"At an institutional IPO price of RM5, dividend yields are decent at 5.7 per cent assuming 85 per cent payout ratio, matching closely to DiGi.Com Bhd (5.5 per cent) but behind TM (6.3 per cent)," said ECM Libra in a research report.
With challenging mobile market space on one hand and a "decent" dividend policy on the other, should investors chase after the Maxis shares when it is opened for trading tomorrow?
In general, analysts are excited about the IPO.
Based on Bloomberg data on analysts' recommendations, two research houses, namely OSK Research and PM Securities, have placed a "buy" call on Maxis, with a target price of RM5.26 and RM5.80 respectively.
ECM Libra has placed a fair value of RM6.10 on Maxis. "We believe the premium is justified given its large market capitalisation, mobile leadership position and strong free cash flow," it added.
Analysts listed some catalysts that may drive the share price up even further, such as the much-rumoured Maxis-Astro merger or injection of its overseas assets in the long term.
Despite the complaints, there are quarters who like the relisting including Prime Minister Datuk Seri Najib Razak and stock market operator Bursa Malaysia, saying that it will help enhance the local stock market's attractiveness.
Rivals Celcom (Malaysia) Bhd and DiGi also viewed the relisting positively, as it wil create greater transparency in the industry. From their perspective, they will now be able to know where exactly they stand in terms of revenue and subscriber market share.
Still, amid the praises and complaints, one must be reminded that at the end of the day, the relisting of Maxis is but all a corporate exercise.
Through it, major shareholders are able to sell their shares in Maxis to retail and institution investors. These funds may then be used to finance parent Maxis Communications Bhd's Indian operations.
By listing on the stock exchange, the company, which has some RM5 billion net debt, will have easier access to various types of funding.