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09/04/2009 updated
Maybank-OR most active yesterday, Axiata ex-rights today
KUALA LUMPUR: Malayan Banking Bhd rights shares entitlement (Maybank-OR) topped the most active list on its maiden trading day yesterday, making up one-eighth of the total number of securities done.
Maybank-OR traded between 99.5 sen and RM1.22, averaging at RM1.08 yesterday, before closing at RM1.06, down 36 sen, with 109.04 million shares done. In theory, there is a 12 sen incentive to pick up the rights entitlement, based on yesterday’s closing prices (excluding brokerage fee).
Maybank traded between RM3.86 and RM4.10 before closing at RM3.92, down 24 sen or 5.8%. Maybank’s volume of 25.6 million shares yesterday was also more than double the 13.3 million seen the day the stock traded ex-rights.
Maybank-OR will stop trading on April 14 and holders have until April 21 to pay the subscription price of RM2.74 apiece.
Meanwhile, Axiata Group Bhd (formerly TM International Bhd) will trade ex-rights today. Investors who buy Axiata shares today are not entitled to subscribe to the rights shares.
Axiata’s five-for-four rights shares entitlement will start trading on April 15. Axiata fell six sen to RM2.63 yesterday with 18.59 million shares done after trading between RM2.58 and RM2.69.
Axiata’s RM2.63 close yesterday puts its ex-rights price at RM1.79 (adjustment factor 0.681031). This puts the underlying (ex-rights) shares at 67 sen or 37.4% premium to the subscription price of RM1.12 a share for the rights.
In a report dated March 31, OSK Research said the results of the Bukit Gantang, Bukit Selambau and Batang Ai by-elections yesterday “could affect the performance of Axiata’s share price”.
The OSK report, done purely based on its analysis of share price behaviour of companies that recently made cash calls like HSBC Ltd as well as Singapore’s DBS Group Ltd and Chartered Semiconductor Ltd, concluded that Maybank and TMI shares “could well experience a short-term rally after they go ex-rights”.
“With a sharp price adjustment due to their large dilutive effect, the overhang from investors who opted not to subscribe for the rights could disappear after the shares go ex-rights, which means we could see a sharp rebound in the share prices.
“The share prices could then hold throughout the rights trading period in order to make the subscription of the rights more attractive for minority shareholders but eventually, there would be selling pressure once the new rights shares are issued.
“We feel that Maybank and Axiata’s share price performance would most closely track those of HSBC, Chartered and DBS during their rights issue exercises,” OSK said in the report.
OSK, in its report, had qualified that its analysis and projections on rights issues “ignores other fundamental developments”. Maybank shares had gained 19.6 sen or 5.35% to RM3.86 on March 31, the day it traded ex-rights. From there, Maybank went as high as RM4.18 intra-day on April 6.
However, it is worth nothing that some of the bullishness may have been due to improved sentiment on banking stocks globally when the US decided to ease mark-to-market accounting rules, a move that some experts speculate could boost bank’s earnings by 20%.
However, this bullishness dissipated after billionaire investor George Soros on Monday warned the danger of watering down mark-to-market rules, saying that it only prolongs the life of US “zombie” banks.
In a note yesterday morning, OSK estimated that Maybank-OR (rights to the rights issue) could trade between 78 sen and RM1.19 (RM3.52 to RM3.93 post subscription of the rights issue), with a potential fair value closer towards the RM1 to RM1.19 level.
OSK has a RM4 target price for Maybank, based on 1.1 times forward price-to-book valuation.
“Investors with relatively high holding cost would be better off subscribing to the rights, given the relatively low subscription price versus their existing holding cost and strong averaging effect. In addition, the current depressed valuation provides longer-term upside potential,” OSK said.
( The Edge )
Maybank-OR most active yesterday, Axiata ex-rights today
KUALA LUMPUR: Malayan Banking Bhd rights shares entitlement (Maybank-OR) topped the most active list on its maiden trading day yesterday, making up one-eighth of the total number of securities done.
Maybank-OR traded between 99.5 sen and RM1.22, averaging at RM1.08 yesterday, before closing at RM1.06, down 36 sen, with 109.04 million shares done. In theory, there is a 12 sen incentive to pick up the rights entitlement, based on yesterday’s closing prices (excluding brokerage fee).
Maybank traded between RM3.86 and RM4.10 before closing at RM3.92, down 24 sen or 5.8%. Maybank’s volume of 25.6 million shares yesterday was also more than double the 13.3 million seen the day the stock traded ex-rights.
Maybank-OR will stop trading on April 14 and holders have until April 21 to pay the subscription price of RM2.74 apiece.
Meanwhile, Axiata Group Bhd (formerly TM International Bhd) will trade ex-rights today. Investors who buy Axiata shares today are not entitled to subscribe to the rights shares.
Axiata’s five-for-four rights shares entitlement will start trading on April 15. Axiata fell six sen to RM2.63 yesterday with 18.59 million shares done after trading between RM2.58 and RM2.69.
Axiata’s RM2.63 close yesterday puts its ex-rights price at RM1.79 (adjustment factor 0.681031). This puts the underlying (ex-rights) shares at 67 sen or 37.4% premium to the subscription price of RM1.12 a share for the rights.
In a report dated March 31, OSK Research said the results of the Bukit Gantang, Bukit Selambau and Batang Ai by-elections yesterday “could affect the performance of Axiata’s share price”.
The OSK report, done purely based on its analysis of share price behaviour of companies that recently made cash calls like HSBC Ltd as well as Singapore’s DBS Group Ltd and Chartered Semiconductor Ltd, concluded that Maybank and TMI shares “could well experience a short-term rally after they go ex-rights”.
“With a sharp price adjustment due to their large dilutive effect, the overhang from investors who opted not to subscribe for the rights could disappear after the shares go ex-rights, which means we could see a sharp rebound in the share prices.
“The share prices could then hold throughout the rights trading period in order to make the subscription of the rights more attractive for minority shareholders but eventually, there would be selling pressure once the new rights shares are issued.
“We feel that Maybank and Axiata’s share price performance would most closely track those of HSBC, Chartered and DBS during their rights issue exercises,” OSK said in the report.
OSK, in its report, had qualified that its analysis and projections on rights issues “ignores other fundamental developments”. Maybank shares had gained 19.6 sen or 5.35% to RM3.86 on March 31, the day it traded ex-rights. From there, Maybank went as high as RM4.18 intra-day on April 6.
However, it is worth nothing that some of the bullishness may have been due to improved sentiment on banking stocks globally when the US decided to ease mark-to-market accounting rules, a move that some experts speculate could boost bank’s earnings by 20%.
However, this bullishness dissipated after billionaire investor George Soros on Monday warned the danger of watering down mark-to-market rules, saying that it only prolongs the life of US “zombie” banks.
In a note yesterday morning, OSK estimated that Maybank-OR (rights to the rights issue) could trade between 78 sen and RM1.19 (RM3.52 to RM3.93 post subscription of the rights issue), with a potential fair value closer towards the RM1 to RM1.19 level.
OSK has a RM4 target price for Maybank, based on 1.1 times forward price-to-book valuation.
“Investors with relatively high holding cost would be better off subscribing to the rights, given the relatively low subscription price versus their existing holding cost and strong averaging effect. In addition, the current depressed valuation provides longer-term upside potential,” OSK said.
( The Edge )
