Astro debut set to spice up week of listings


By B.K. SIDHU

THIS is a week of listings. Equine Bhd, which takes over the listing status of KL Industries Holdings Bhd, will be listed on the main board today while the much-talked of debut of Astro All Asia Networks plc will take place on the main board tomorrow. 

On Friday, Johore Tin Bhd makes its debut on the second board. 

Given the huge demand for its shares that were 14 times oversubscribed, it would be no surprise to see Astro commanding a good premium, said analysts, adding that a company within the Usaha Tegas group “was expected to command a premium.’’  

“Astro would emerge as one of the top 15th in terms of market capitalisation upon its listing and it's likely to be included as a CI component stock in the future,'' said an anlayst. 

It is anybody’s guess what the premium would be but some fund managers are looking at the mid-RM4 range. A local stockbroker pegged his fair value of Astro at RM4.70 a share and another at RM5. (Astro's retail price is fixed at RM3.65 and the institutional tranche at RM4.06 a share). 

Would the stockbroker recommend a sell if Astro hits fair value? He said: “It would depend on market conditions, outlook and target. A long term investor would continue to hold.’’ 

If there is any comparison to be made, the recent listings on the KLSE show that IPOs are now fetching higher premiums.  

LFE Corp Bhd, which made its debut on the second board yesterday, fetched 90 sen premium. Last week, Dominant Enterprise Bhd and Furniweb Industrial Products Bhd recorded premiums of 35 sen and 62 sen respectively on the second board. 

The Astro IPO is the largest after its sister company, Maxis Communications Bhd, and PLUS Expressway Bhd were listed on the KLSE in July last year. 

If the share price performance of Maxis is any gauge, Astro should do well. The difference is Maxis was listed when market conditions were lukewarm and the US economy was in a slump, while Astro is making its debut when the stock market is charging ahead against an optimistic outlook. 

Despite that, Maxis fetched a 12% premium or 55 sen gain over its retail offer price of RM4.36 on its first day of listing. It closed on that day at RM5.15, up 79 sen representing an 18% gain.  

Maxis shares were trading within the RM4 to RM5 range for a long time. Yesterday, Maxis closed at RM7.60 which is a 74% rise over the IPO price, translating into a gain of RM3.24.  

Those that had picked up Maxis shares on the day of listing were mostly institutional funds and they now stand to almost double their gains, said an analyst. 

Maxis had sold 652.3 million shares, which is 28% more than Astro’s offering of 508.4 million shares, of which 425 million were put aside for institutions and 83.4 million for retail investors. 

An industry expert said: “The Astro shares were priced into the future and as the company's subscriber base grows, so will its cashflow. After a while, it will be pure cashflow and this is when the real value will be realised.’’  

“We believe the TV business can bring in free cashflow and earnings at over 20% per annum for the next five years,’’ said an analyst in his research report. 

He estimates the free cashflow of Astro to reach RM101mil for FY2004 and RM311mil a year later. Net profit is estimated at RM71mil for FY2004 and RM214mil in FY2005. 

A local research analyst's estimate is not too far out either. He puts cashflow at RM350mil for FY2005 and net profit at RM180mil the same year. 

For a pay-TV, the initial outlay is huge. Astro has so far invested RM4.5bil. It has reached a critical mass in subscriber base of 1.1 million which is expected to reach 2 million in five years' time. 

 Stock Watch On ASTRO

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