TM shares will be adjusted downwards on April 23 to reflect the distribution of shares in the enlarged TMI. Shareholders will get one TMI share for every TM share held and their CDS account is to be credited on April 25.

The combined reference prices of TM and TMI shares will be equivalent to the last traded price of TM shares on April 22, the last day to acquire TM shares and be entitled to the TMI shares.

 

A range of valuation methods would be considered in determining TM’s value including its expected dividend yield factor and net asset value, TM has said the demerged TM intended to pay out the higher of at least RM700 million or up to 90% of its net profits in dividend.

Pending the stock exchange’s announcement of the reference prices, investors are left to their own assumptions, the simplest of which is a 2:1 split of TM’s current share price where TMI will carry two-thirds of current valuation.

Based on this assumption and Bloomberg’s poll of 28 analysts’ current fair value for TM of between RM9.70 and RM13.90, the demerged TM would be valued between RM3.23 and RM4.63.

Several analysts this week gave clients a more specific guidance on how the value will be split between TM and TMI. CLSA senior investment analyst Clare Chin, for instance, told clients yesterday that based on its RM11.20 target price for TM, the implied value of TM post de-merger is RM3.65 while TMI would be valued at RM7.55.

On Tuesday, RHB Securities told clients it valued TM at RM4.54 and TMI at RM8.03, based on a split of its sum-of-parts-derived fair value of RM12.60.

Based on its target price, RHB estimates that TM, which is currently the fifth largest stock on the Kuala Lumpur Composite Index, will see TMI ranked number nine post-demerger while TM will fall to number 14.

TM chairman Tan Sri Muhammad Radzi Mansor said the demerger was on-track for completion on April 25, ahead of its initial target of end-June.

Yesterday’s shareholders’ meeting was also Wahid’s last as CEO of TM. He will leave TM at the end of this month to take up the president and CEO chair at the country’s largest lender, Malayan Banking Bhd, effective May 2.

…the edge daily..