How much do you want to pay for a company that has an operating cash flow of 951 million per quarter?
Have a look at the numbers yourself.
An operating cash flow of 951 million is simply awesome!
Again it's simply so sad that whenever there is an IPO, the investing public is USUALLY asked to invest at the most priciest price based on the most optimistic pricing.
And during privatization, they want you, yes you, the minority shareholders, to sell your shares back to them at the cheapest price possible based on the most pessimistic pricing!
Fair? Life is never fair, yes?
A free market?
One day... just imagine.. there might not be anyone interested in investing in the share market!
Dear Moolah,
ReplyDeleteBased on your comment on cashflow on Maxis i feel that it is slightly over stated bcos
1) If u based on Gross operating cashflow of maxis using Rm 900m per qtr we are talking cashflow per share of Rm 1.50 on annualsed basis given a yield of 10%p.a agst share price but then did not not take into a/c of capex.
2)If we take into capex the net cashflow this qtr is Rm 532m this give a annualsed this give a cashflow per share of Rm 0.84.This give a yield of 5.5% p.a.
3)The current financing interest rates is about 6% to 8% therefore the takeover is not so easy for Ananda as we thought,there is alot of work to do and he have taken a big risk although eventually he will make money.
My Dearest Grahamsmun,
ReplyDeleteNo, I do not think I would value company based solely on its operating cashflow.
This simple posting is to show the immense cash flow that Maxis has.
And not forgetting I do not disagree with your methods.
However, capex.. yes... it's such a beast in a company.
So what about the capex? For Maxis, much of the capex was used to invest in India. Is there a potential there?
Consider this link:
http://biz.thestar.com.my/news/story.asp?file=/2007/4/16/business/17428881&sec=business
see this part..
India is a huge market that has a population of 1.1 billion and even though the growth in mobile sector is robust, there are only 142 million mobile subscribers and the penetration rate is a mere 12.7%.
Since taking over, Maxis has seen its Indian subscribers double from 2.4 to 4.4 million (5 million as at end-March 2007) and market share increase by 0.2% from 3% previously. This may appear small, but it is huge in a market where there are 142 million mobile subscribers.
Now since this GO is an offer to buyout the shareholders, shouldn't the shareholder get a valuation of this 'capex' or shall i call it as investment?
By the way... if Maxis really had difficulty in raising money, why wasn't the noble way of issuing a rights issue made so that the current investors had a chance to see their investment grow given the fact that there are clear visible signs that Maxis Aircel is starting to bear fruit?
To privatize is to simply to take everything away!
rgds
Dear mulalah,
ReplyDeleteThe cashflow method i pescribe is recommended by warren buffet, when assessing investment on cashflow basis,i think it is a fair assessment.
On your arguement that India offer good prospect, this i do not disagree but then Maxis had not really converted that into really good profit yet.Furthermore there are also quite a few competitors there.
Lets be fair before Ananda make the offer at Rm 15.60 which quite generous, no analyst actually dream this price! He could have slowly mopped up from the mkt if he chose to but he did not!.
The issue of coming up with a right issue could work, but some time it is difficult to convince some of skeptical investors, and furthermore the regulatory approval may take too long.
In addition competitor with greater financing such as vadafone is also pursuing the mkt.
I m not saying Ananda is not going to make money but at least here he is honorable enough to offer a reasonable good price, even the good cashflow u have highlighted has not supported the GO price he had offered!