Maybank, Axiata share price may face pressure

KUALA LUMPUR: Now that Malaysia’s two largest cash calls to raise some RM11.45 billion is near their respective closing, it is now time to watch if the share prices of Malayan Banking Bhd and Axiata Group Bhd would succumb to selling pressure when the new rights shares list over the next two weeks.

Up to 2.2 billion new Maybank shares are scheduled to list by April 30, while Axiata (formerly TM International Bhd) will see up to 4.59 billion new shares listed by May 11.

However, “some medium-term weakness” could emerge when the new rights shares are listed, OSK Research said in a report in late March. This was concluded based on its analysis of share price trends of companies like HSBC plc and DBS Holdings Ltd that recently completed cash calls.

OSK had qualified that the analysis ignored fundamental developments. So far, it had been right about share prices trending higher post ex-rights and prices holding up during the rights entitlement trading period.

The final number of rights shares to be listed is scheduled for released by Monday for Maybank and by May 5 for Axiata, when the companies announce the final subscription results for their respective rights exercise.

Maybank’s share base will be enlarged by 45% to 7.08 billion shares from its nine-for-20 issue while Axiata’s five-for-four issuance is expected to balloon its share base by 125% to 8.45 billion shares.

An analyst with a local brokerage firm said he “still expects some selling pressure when the rights shares list”, although acknowledging that Axiata’s share price had run ahead of his expectations.

At yesterday’s closing prices, investors who picked up both Axiata’s and Maybank’s renounced rights entitlement and subscribed to the rights shares are sitting on theoretical paper gains.

Axiata shares closed at RM1.98 yesterday, up 18.9 sen or 10.6% from its ex-rights price of RM1.791 on April 7.

Axiata’s renounced rights entitlement (unpaid rights to the rights shares) that ceased trading yesterday, had traded between 57 sen and 73 sen apiece before closing at 69.5 sen.

This puts investment cost, for those who picked up the renounced rights and paid RM1.12 apiece to subscribe to the rights, at between RM1.69 and RM1.85 apiece. This is between 6.6% and 14.6% below Axiata’s RM1.98 close yesterday.

Axiata rose to as high as RM2.06 intra-day trade yesterday, before closing at its intra-day low of RM1.98, its fifth straight day of gains. The stock has over the past month gained 50.9 sen or 34.6% from its recent low of RM1.471 on March 18.

Similarly, Maybank’s renounced rights entitlement traded between 98 sen and RM1.09 before they closed and delisted at RM1.06.

Investors who picked up these renounced rights entitlement from the open market and subscribed to the rights at RM2.74 apiece, puts their investment cost for the rights shares that are about to be listed at between RM3.72 and RM3.83 apiece.

This is between 11.3% and 13.9% below the RM4.32 close of Maybank shares yesterday. Maybank’s RM4.32 close yesterday is also 65.6 sen or 17.9% above its ex-rights price of RM3.664 on March 30.

Maybank is raising RM6.2 billion to boost its balance sheet while Axiata is looking to pare debt using the RM5.25 billion proceeds from the rights issue.