Maybank IB Research said Magnum was not new to offering dividend-in-specie.
PETALING JAYA: Magnum Bhd
, which owns a 7.8% stake in U Mobile, may distribute the U Mobile shares to its own shareholders as dividend-in-specie, should the telecommunication company be listed on Bursa Malaysia.
It was previously reported that U Mobile, which recently secured the right to implement Malaysia’s second 5G network, is planning for an initial public offering (IPO) of at least RM10bil in 2025.
In a latest note, Maybank Investment Bank (Maybank IB) Research said Magnum was not new to offering dividend-in-specie.
Magnum, formerly known as Multi-Purpose Holdings Bhd, used to own various non-gaming assets such as general insurance, property development, property investment and stockbroking.
The non-gaming assets were demerged into MPHB Capital Bhd in June 2013 and Magnum had then distributed those MPHB shares in specie to shareholders.
Currently, Magnum is one of three national number forecast operators in Malaysia with 471 outlets.
Maybank IB Research believes that Magnum is the only listed company with exposure to U Mobile.
Its investment in U Mobile is currently carried in its accounts at RM385.4mil or 20 sen per share.
Assuming U Mobile is valued at RM10bil in the IPO, Maybank IB Research said the value accreted to Magnum will be RM398.6mil or 21 sen per share.
“Coupled with our Magnum target price of RM1.33, the above would imply returns of at least 30%,” it added.
The research house also noted that U Mobile must reduce its foreign shareholding to 20% as a condition of it securing the right to implement the second 5G network.
“Its high foreign shareholding of 48% currently suggests to us that it can launch an IPO by offering a portion of this tranche of shares for sale without Magnum diluting its shareholding.”
