Friday, May 04, 2007

The Positiveness of the Situation and Someting On Maxis

It's hard not to buy shares in this season. I believe most people have started to pour in money into the stock market and kept pushing the prices higher and higher everyday.

A few companies shares prices that I am following are a bit nearer to the edge. What would it need to just step a litte bit more to the empty space beyond the edge?

A fall in Shanghai stock exchange or a drop in Dow Jones Index or a slip of tongue from someone revered in Malaysian economy that he or she is 100% selling.

Now about Maxis. From its published financial report the EPS is 83.90cents for the year ended 2006 and for 2005 it is for 67.30cents while for 2004 it is 64.80. The trend is going up but cash flow trend is a different story.

The operating cashflow is stagnating at around RM3-3.3billion from 2004 to 2006, it is going to be hard to increase it to higher figure if only focusing to saturated Malaysian Market, currently the marketing tactics is reduce product price. Thus the solution is to go abroad.

Starting in 2006 Maxis invested nearly RM2.7billion to acquire subsidiary and still opt to pay dividend of nearly RM1billion to its shareholder in the same year.

Although it already have RM3.4billion in cash it took on loan amounting to RM2.7billion. The cash mainly went to investing activities.

Unfortunately its investment in Indonesia is not making money fast. The subsidiary may need more money to grow before becoming profitable. Thus the next reasonable action is to reduce giving dividend and citing the reason. I've seen this being done by a company.

But Maxis majority shareholder chose to take Maxis private.

From what I can infer it could be that they don't want to pay dividend anymore and wanted to use it for growing the susidiary while at the same time they don't have to show to the public that a subsidiary is making a loss.

Actually what is happening to Maxis is boggling my mind. The unfolding story is not something that usually happens.

The past cases I've known for a buyout is that the company is healthy, the shares is undervalued, someone figured out what the should be value and oferred to buyout all the outstanding shares to keep all future profit to himself.


At May 08, 2007 5:53 AM, Blogger Zulhairy said...

Last three days someone posted a comment on my blog, it goes like this, "Are you Zulhairy.... from ...?

My answer is,"that is correct..."


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