MAG is currently the only listed company with exposure to U Mobile, which will implement the second 5G network and is planning to list on Bursa Malaysia Exchange. If U Mobile is valued at MYR10.0b, it will add a fine 21sen/shr to MAG DCF-TP. Maybank IB said it also believe that MAG will dividend its U Mobile shares in specie to shareholders post-listing.

The house estimates earnings and DCF-TP for MAG and trims 1% on minor housekeeping. Under a 'blue sky' scenario, total returns will amount to 36%.

Unbeknownst to many, MAG owns 8% of U Mobile
U Mobile (Not Listed) has been in the limelight of late thanks to it being selected to implement the second 5G network. It has also been reported that it is planning to launch an initial public offering (IPO) next year with a valuation of at least MYR10.0b. Recall that MAG owns 7.8% of U Mobile, Maybank said its perusal of its shareholders' list, it believes that MAG is the only listed company with exposure to U Mobile. MAG's investment in U Mobile is currently carried in its accounts at MYR385.4m or 20sen/shr. 21sen value accretion if U Mobile IPOs at MYR10b

As a condition of it securing the right to implement the second 5G network, U Mobile must reduce its foreign shareholding to 20%. Its high foreign shareholding of 48% currently suggests to us that it can launch an IPO by offering a portion of this tranche of shares for sale without MAG diluting its shareholding. Assuming U Mobile is valued at MYR10.0b, the value
accreted to MAG will be MYR398.6m or 21sen/shr. Coupled with MAG DCF-TP of MYR1.33, the above would imply returns of at least 30%.

MAG shareholders may receive U Mobile shares
Should U Mobile be listed, the house gathers that MAG will dividend its U Mobile shares in specie to shareholders as MAG has done this before. Recall that MAG was formerly known as Multi-Purpose Holdings and used to own various non-gaming assets (i.e. general insurance, property development, property investment, stockbroking, etc.). The non-gaming assets were demerged into MPHB Capital (MPHB MK, CP: MYR1.62, Not Rated) on 28 Jun 2013 and MAG distributed those MPHB shares in specie to shareholders.