Maybank Investment Bank Issues 8 New Call Warrants
Kuala Lumpur, 26 January 2014 – Maybank Investment Bank Berhad (“Maybank Investment Bank”) is issuing eight new European style cash-settled call warrants (“CW”) over ordinary shares of Astro Malaysia Holdings Berhad (“ASTRO”), Axiata Group Berhad (“AXIATA”), DiGi.Com Berhad (“DIGI”), MISC Berhad (“MISC”), MSM Malaysia Holdings Berhad (“MSM”), Tenaga Nasional Berhad (“TENAGA”), Westports Holding Berhad (“WPRTS”) and Zhulian Corporation Berhad (“ZHULIAN”). The warrants will be listed on Monday, 27 January 2014 with an issue size of 100 million each.
This tranche features a mixed bag of companies which are expected to perform for various reasons. The Malaysian telecommunication sector may see some key developments in 2014. Higher adoption of smart devices and wider 3G and 4G service coverage is expected to drive industry growth. The government’s subsidy rationalisation policies are expected to benefit TENAGA and MSM in 2014 as the effect of higher electricity tariffs and sugar prices is reflected in the companies’ earnings.
ASTRO is Malaysia’s leading integrated consumer media entertainment group. It has 3.6 million subscribers and 53% penetration rate of Malaysian households. Maybank Research has a BUY call on ASTRO for its stable subscriber base and resistance to inconsistency of advertising expenditure.
AXIATA is a multinational mobile operator with presence in 9 countries and 215 million subscribers across Asia. A potential catalyst for AXIATA is its telecommunication tower divestment exercise.
DIGI is the third largest mobile operator in Malaysia with 10.5 million subscribers. It is part of the Telenor Group of companies.
In December 2013, the Malaysian government announced a 14.9% blended tariff hike for Peninsular Malaysia. Being the largest electricity utility company in Malaysia, TENAGA stands to benefit from the recent tariff hike. Maybank Research upgraded TENAGA to BUY with the recent tariff hike and fuel-cost pass-through mechanism as potential earning catalysts.
The Malaysian government also announced a RM0.34 increase in sugar price in October 2013. Being a leading sugar producer in Malaysia, MSM may be a beneficiary of the sugar subsidy reduction.
Also included in this tranche are MISC, WPRTS and ZHULIAN.
The call warrants have the following gearings, ASTRO-CO (6.82x), AXIATA-CY (5.64x), DIGI-CW (5.38x) MISC-CU (5.21x), MSM-CL (4.27x), TENAGA-C9 (4.37x), WPRTS-CF (3.37x) and ZHULIAN-CC (4.08x). The tenure of all eight CWs above is approximately 12 months.
The terms and conditions of the above call warrants are stated in their respective term sheets and investors should read the term sheets together with the Base Prospectus dated 2 October 2013 and the First Supplementary Base Prospectus dated 15 January 2014.