BRIGHT (9938) - Bright - Brighter Go
Bright Packaging Industry Berhad (Bright - 9938) had once shot into the lime light at the hostile change of ownership which saw the emergence of Dato Ricky Wong through Wong SK Holdings Sdn Bhd as a substantial shareholder for Bright with 22.7% stake on October 2013. After the ruckus in Bright, Wong SK Holdings Sdn Bhd again offer to take over TechFast in 2014 at 26 cents.
Subsequently, Wong SK Holdings Sdn Bhd continue to increase stake in Bright, which is now at the critical border of MGO, which is 33%.
According to the latest filling on the shareholding of Wong SK Holdings Sdn Bhd, it is at the borderline level of 32.936%. Which means, Wong SK Holdings Sdn Bhd just need to purchase from the open market a mere 105,128 units of share in order to trigger the MGO.
What is actually so interesting in Bright that makes Dato Ricky Wong edging nearer and nearer towards a MGO of this listed vehicle?
While an easy answer will be "Value", but what kind of values are the retailer seeing, and what kind of hidden values that the retailer could had missed ?
For most of the mass retailer in the market, the fastest way is to access is cash level, and determine the net cash position. For this case, Bright is holding on a RM 35.616 million of net cash. For a share base of 164.264 million, that is equivalent to 21.68 cents per share.
But for an experienced investor, there are more to that on just the net cash value. These value are easily missed out by retailers that are not familiar with corporate finance, hence hidden value.
Firstly, the company have a share premium of RM 15.584 million. While this amount cannot be access directly by means of dividend, but it can give Bright a potential "bonus issue" of 1 bonus share to 6 existing mother share, enlarging the share base by 27,377,333 share based on par value of RM 0.50, which can utilize RM 13.688 million. (Bonus of 1 to 6 is based on Par value of RM 0.50)
Secondly, the share is carrying a par value of RM 0.50 per share. It is possible for the company to do a par value reduction and capital repayment back to shareholder if agreed by majority of the shareholder. Take an example for a reduction towards par value of RM 0.10, that will unlock 40 cents of shareholder equity that can be repay back to the shareholder.
To take all this into account, if Bright is to do a capital reduction and repayment of 40 cents, and uses RM 30 million to pay special dividend, that would worth a total cash of RM 0.58 per share (RM 0.40 from capital repayment and RM 0.18 from dividend).
Subsequently with the lower par value of RM 0.10, then the company can undertake a bonus issue of 2 bonus share for 3 ordinary share (instead of 1 to 6 with RM 0.50 par value) which will make it more enticing for further speculation and boost liquidity of the share.
At the current price of RM 0.36, that really looks like a crazy offer, where you are paying RM 0.36 with potential of getting RM 0.58 in capital repayment and dividend, and also a chance for a bonus issue exercise. The NTA of Bright is RM 0.73 per share.
To put this into technical mean, Bright had broken 2 resistant line, one which is horizontal resistant of RM 0.34, and a long term down trend resistant line as well. It is a good indicator to see that the counter is gaining positive uptrend momentum, for this case, we will see the potential corporate exercise of MGO is the best fuel to boost the stock price higher.
To take this further, the pioneer vehicle of Dato Ricky Wong, which is Asia Media (Amedia), had went through some corporate exercise and is banging it's way upwards in the market again, sending a signal to the market that Dato Ricky Wong is "in the office and at work now".
While Bright had contracted with Zao Philip Morris Izhora from Russia for a USD 15 million aluminium foil supply, the business had saw challenging environment such as fluctuation of currency and commodity prices. With the potential cash pile in Bright and a ambitious Dato Ricky Wong, who knows if Bright will be a vehicle for some new business venture for him again after Amedia?
For this reason, the chances are bright for Wong SK Holdings Sdn Bhd to head for a MGO in the coming days. In fact, familiar sources are looking to see the MGO putting a potential price range of RM 0.50 to RM 0.60. If the offer is RM 0.60, why not ?
Bone's TP : RM 0.60
BRIGHT (9938) - Bright - Brighter Go