$MAGNUM / 3859 (MAGNUM BERHAD): A Major Beneficiary of U Mobile's Listing

I've previously discussed U Mobile and Magnum in several posts, which you can refer to for more background. In this post, I'll focus on the latest developments.

In the most recent update, Magnum holds a 7.84% stake in U Mobile, which differs from earlier information. U Mobile is currently the third-largest mobile telecommunications service provider in Malaysia, with approximately 6 million users. Its main competitors include $KLSE-CDB, $MAXIS / 6012 (MAXIS BERHAD), and Yes (under YTL Communications).

Last month, reports surfaced that Maxis was considering a buyout of U Mobile, with U Mobile's owners seeking a valuation exceeding RM10 billion. However, new reports indicate that U Mobile has rejected the buyout offer and is planning an initial public offering (IPO). U Mobile is backed by several strong parties (refer to earlier posts for details), and shareholders are aiming for a valuation between RM9 billion and RM11 billion.

Given this valuation range, Magnum's 7.84% equity stake in U Mobile would be worth between RM706 million and RM862 million, representing approximately 39.7% to 48.4% of Magnum's market cap. It appears that the full value of U Mobile has yet to be fully realized, as Magnum is currently trading at a P/E ratio of 13.11, which is typical for the company and higher than Sports Toto's ($KLSE-SPTOTO) single-digit P/E ratio.

In conclusion, the listing of U Mobile is likely to provide a positive outlook for Magnum, as the company's hidden value is finally being unlocked.

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