Protasco rises as much as 5% on bonus issue, positive outlook
Surin Murugiah / theedgemarkets.com
January 19, 2018 10:52 am +08
KUALA LUMPUR (Jan19): Shares in Protasco Bhd rose more than 5% this morning after it proposed a bonus issue of up to 70.78 million shares on the basis of one bonus share for every six existing shares held.
At 10.33am, Protasco was up 5 sen or 4.46% to RM1.17 with 1.99 million shares done. The stock had earler risen to a high of RM1.19.
On Wednesday, Protasco said the issuance also comes with a one-for-four warrants issue of up to 106.17 million warrants.
While the warrants are not expected to raise any immediate funds, Protasco said the group could raise up to RM104.05 million based on an illustrative exercise price of 98 sen per warrant and assuming the warrants are fully exercised.
The group said the bonus issue will be fully capitalised by its share premium account at 50 sen per bonus share.
Meanwhile, CIMB IB Research has maintained its “Add” rating on Protasco Bhd at RM1.11 with an unchanged target price of RM1.43 and said it remains upbeat on Protasco’s outlook in 2018F.
In a note Jan 18, the research house said Protasco is the biggest play on government road maintenance contracts, with a dominant 43% market share in the road maintenance space in 2016 (our estimates).
“It is the only listed company with direct exposure to this segment and stands to benefit from any uptrend in government expenditure on road construction and maintenance.
Commenting on Protasco’s proposal to issue 1-for-6 bonus shares and 1-for-4 free warrants, CIMB Research said the bonus issue is positive as it will enhance the stock’s liquidity while the warrant proceeds will be a buffer for additional working capital needs should the order book pick up in the medium term.
“We retain our FY17-19F EPS and target price, pegged to an unchanged 40% RNAV discount, pending completion of the deal. Road contract wins and election-driven contracts are key catalysts while downside risks to our call are weak earnings delivery, poor execution and job delays,” it said.
