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Thursday, September 11, 2014

I-Bhd's rights issue, free warrants go ex

Source: http://www.thestar.com.my/Business/Business-News/2014/09/10/IBhd-rights-issue-free-warrants-go-ex/

KUALA LUMPUR: Shares of I-Bhd fell on Wednesday after its rights issue with free detachable warrants went ex while analysts remained upbeat on the corporate exercise.
At 10.35am, it fell 20 sen to RM1.24 with 10.98 million shares done.
The FBM KLCI fell 2.89 points to 1,871.23. Turnover was 713.26 million shares valued at RM406.44mil. There were 281 gainers, 265 losers and 295 counters unchanged.
JF Apex Research said in a recent report that investors see more value in the stock even after the share split and may eagerly participate in the upcoming corporate exercise, that is the rights issue, bonus issue (after the rights issue), and 3% irredeemable convertible unsecured loan stocks (ICULS).
To recap, the details of the corporate exercise consist of five rights shares at the issue price of 69 sen a  share for every four existing shares; one free warrant for every five rights shares subscribed; one bonus share for every five enlarged number of shares (after the rights issue); and five ICULS at the offer price of 50 sen per ICULS for every one existing share.
JF Apex Research believed the minority shareholders shall benefit from the subscription of both rights issue and ICULS as the rights issue price (52% discount to the theoretical ex-rights Price of RM1.45 based on share price of RM2.41) and ICULS offer price (47% discount to the theoretical ICULS price of RM0.94) are at steep discount.
“We reckon that investors could gain from the exercise by finally owning 2,700 ordinary shares, 300 warrants and 5,000 ICULS (after bonus) with total intrinsic value worth RM8,015 with initial investment of 1,000 ordinary shares, and entitlement of 1,250 Rights shares and 5,000 ICULS with total costs of RM5,772.50.
“Thus, the corporate exercise shall reward shareholders with unrealised return on investment (ROI) of 39% based on our assumptions for the calculations of theoretical ex-all price, theoretical warrant and ICULS prices,” it said.
JF Apex Research estimated the corporate exercise would help raise RM294.3mil for the group’s future expansion and increase the stock’s free float, the dilution of earnings per share (EPS) could be as high as 80% for 2014F net earnings as the share base will increase from current 229 million to 1.384 billion after the whole exercise.
“Also, the group will incur some leverage in its balance sheet after factoring in the RCULS and ICULS from current net cash position,” it said.

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