KUALA LUMPUR: Kenanga Investment Research has pegged a fair value of RM5.50 for Maxis Bhd which is scheduled to be listed on Bursa Malaysia on Thursday, Nov 19.

The research house said on Wednesday, Nov 18 its discounted cashflow value of RM5.50 implied a FY10F multiple of 16.8 times and a yield of 4.7%.

"This is a slight premium to DiGi’s 16 times and yield of 6% which is deemed justified given Maxis’ leadership in the mobile space and profitability," it said.

Kenanga Research said growth drivers include under penetrated markets in Sabah and Sarawak with less than 60% penetration and broadband in an otherwise maturing industry.

It said prospects were improving for the industry as economic recovery gains momentum. Its economics team forecast 2009 GDP to contract 2.1% before recovering to a growth of between 3% and 4% in 2010.

A higher level of economic activity should translate into higher spending power and SIM penetration.

It added Maxis had strong cash generating capability and forecast the company to generate strong operational free cashflow of about RM5.5 billion per annum between 2010 and 2011 helping to sustain dividend.

"Based on projected payout of 80% which is above the guided minimum of 75%, stock is yielding a decent 4.7% based on fair value of RM5.50," it said.

The IPO will raise RM11.2 billion, with the final selling price fixed at RM5 per share for institutions and RM4.75 for retail investors.