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Wednesday, December 12, 2012

Analysts bullish about Mah Sing’s RM400mil cash call


They say it is confident of securing new landbank in some key markets next year
<B>Crowd puller:</B> Mah Sing Group getting good response at a recent property fair.Crowd puller: Mah Sing Group getting good response at a recent property fair.
PETALING JAYA: Property developer Mah Sing Group Bhd's proposed fund-raising exercise which is expected to raise some RM400mil will relieve the group from overstretching its balance sheet when it aggressively expands its landbank.
Analysts are generally bullish about the cash call and that Mah Sing is confident of securing new landbank in some of its key markets like Penang and Johor Baru in the first half of next year.
This would enable it to at least match its “achievement” this year of RM5.88bil in gross development value (GDV) replenishment,AmResearch Sdn Bhd said in a note to clients.
“Except for the concerns about the potential dilution, this rights issue comes with a sweetener, in the form of warrants and bonus issue.
“The bigger share base would improve its liquidity in the market which should attract more funds,” it added.
The research outfit said that with the cash call, Mah Sing's net gearing would at least be kept at its target level of 50% (current net gearing is 30%).
Meanwhile, the market appeared to be neutral on the cash call with the stock ending flat at RM2.23 after trading at an intra-day high of RM2.28. A total of 1.2 million shares changed hands.
On Monday, Mah Sing proposed a renounceable rights issue of new shares with free warrants to its shareholders to raise gross proceeds of RM400mil to finance its operations and business expansion.
The entitlement basis, date and issue price have yet to be determined.
According to a filing with Bursa Malaysia, the proposed rights issue with warrants would enable the group to raise funds “to part finance its property development expenditure, future land acquisitions and for its general working capital requirements which are expected to contribute positively to the future profitability of Mah Sing Group.”
CIMB Research said the rights issue provided investors an opportunity to increase their holdings as Mah Sing shares were relatively illiquid at times.
“Any negative knee-jerk reaction to the cash call could provide investors the opportunity to accumulate Mah Sing shares at a lower price before the land-banking acquisitions are eventually announced,” said the research house in its morning note.

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