BTM (7188) : BTM Resources, Bit The Bullet, A Turnaround Likely

BTM (7188) : BTM Resources, Bit The Bullet, A Turnaround Likely

BTM Resources Bhd finally completed their multiple proposals in order to cut accumulated losses and improve the balance sheet of the company that keeps on showing losses. The timber-based company successfully did  a par value reduction and share premium reduction as well as a rights issue with warrants. The par value reduction will see the cancellation of 80 sen from its RM1 par value which will see the company raise RM32.6 million from the exercise to fund the offset of accumulated losses amounting to RM46.2 million as of June 30, 2013. The lower par value of 20 sen per share would effectively allow BTM to issue new shares below the current par value of RM1 per share and closer to its audited net assets per share of 28 sen per share.

From the chart note when they dived from 35 sen to below 25 sen and subsequently stayed around 20 sen for the last 3-4 months, thats because the proposals kicked and many did not want to cough up more money to get the rights. That has gone ex  a week ago, money in the back now.

From my Murasaki system which tracks early momentum signals and live money flow indicators, both surged significantly.

WHY I LIKE it now:

a) Funds successfully raised, and at 20 sen for the new shares, it creates a strong bottom around 20 sen

b) Its in the right industry, timber, but was caught by slowing demand for the past 3-4 years. The uptick in timber related stocks 6-12 months past did not provide a boost to BTM as it was already structurally hurt from poor industry metrics from losses over past 3-4 years.

c) Crucial here that they reduced the par value to 20 sen. That will allow them to issue new shares to tap capital and/or buy synergistic companies with new shares.

d) The grand easing by Japan over the last 2 months, in particular last week, basically ramped up potential demand from one of the biggest buyer.

Can expect it to scale back above 30 sen as more investors get wind of the good turnaround story, plus an under-owned stock for now.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). I may already have positions in the stock mentioned above. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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