Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: HLG

KUALA LUMPUR: HLG Research said there were recent concerns of a potential overhang on Axiata Group Bhd and TELEKOM MALAYSIA BHD []'s share price from a 2006 issued Khazanah Rafflesia Sukuk which is due to mature in Oct 2011.

In a research note issued on Thursday, Oct 7, it said the Rafflesia Sukuk is currently trading at a 13.7% premium to its dissolution price.

'Sukuk holders have the option of converting the Sukuk to Axiata and TM shares (and selling in the open market). At current share prices, Sukuk holders would have a 15% conversion gain over the dissolution price,' it said.

HLG Research said given the positive outlook for MYR appreciation, investors may choose to maintain their shareholdings to realize additional forex gains.

High dividends and good prospects for TM and Axiata may attract investors to maintain their holdings with these companies.

'We maintain our BUY calls on Axiata and TM and leave our forecasts unchanged. We remain positive on these two stocks and view any price weakness from the overhang as an opportunity to accumulate,' it said.