TM International Bhd’s (TMI) reference price has been set at RM7.85 and Telekom Malaysia’s (TM) at RM3.05 following the demerger exercise. TM shares would be trading at the new reference price today while TMI would make its debut on the main board on Monday.

TMI’s reference price was calculated by substracting the TM reference price from the closing of TM share price yesterday at RM10.90. TM would continue to remain a component stock of the KL Composite Index, while TMI’s inclusion would depend on whether its market capitalisation was more than 1% of the full market cap of the main board and volume traded for the month was within the top 75% band among all the companies on the main board.

(StarBiz)

Comment: TMI’s reference price is very close to our fair value computation of RM8.10, and could have been set at that level as management may believe that investors are willing to pay a premium to participate in the growth of the mobile
businesses with overseas exposure.

On the other hand, TM’s reference price may have been set low to attract interest in the stock due to muted growth prospects in the fixed line business, and intensifying competition in the broadband market due to the entry of alternative broadband offerings such as WiMAX and 3G. We have a fair value of RM5.00 for TM.