This article first appeared in The Edge Financial Daily, on June 3, 2016.
WZ Satu Bhd (-ve)
SHARES in WZ Satu Bhd (fundamental: 1.4/3, valuation: 0.8/3) closed seven sen or 5.98% lower at RM1.10 yesterday, with 1.65 million shares changing hands, higher than the 200-day average trading volume of 172,755 units. This is the first time the stock triggered our momentum algorithm.
The group, which is primarily involved in civil engineering and construction, oil and gas, and bauxite mining, announced on Wednesday that it was going to buy Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (Silk) for RM368million from Silk Holdings Bhd.
It will settle the acquisition by RM239.25 million in cash and RM128.75 million via 125 million new shares for 50 sen each in WZ Satu at an issue price of RM1.03 each, representing 4.63% over the volume-weighted average market price up to May 31 of RM1.08.
As at Feb 29, the group’s net cash stood at RM44.63 million. WZ Satu’s counter is trading at a trailing 12-month price-earnings ratio of 20.5 times.
WZSATU (7245) - Stock With Momentum: WZ Satu