Upbeat Earnings Moving Ahead – Kanger International Berhad
One of the quickest and most effective way of gauging if a company is “trustworthy” would be on the act of its management. This is fairly straightforward, given that if the management owns a huge chunk of share in the company, the ultimate reward – in share price would benefit them as long as they performed well.
Recently, Kanger International Berhad (0170) two good news to be announced. The first one being the company had received an extension of time granted by Ganzhou Bank Co., Ltd for the repayment of RMB60 million loan. So far, KANGER had only repaid RMB8 million in the loan.
The extension of repayment signifies a vote of confidence from Ganzhou Bank Co., Ltd to KANGER, which I expect them to have interesting stories moving forward.
Next, if we backdate to 26th April 2021, KANGER had also ventured into a share sale agreement with Sii family to purchase 51% stake of Sung Master Holdings Sdn Bhd for a total consideration of RM94.8 million.
As we mention earlier, one of the best way to gauge the trustometer of a company is the act of the management.
Under ordinary resolution 1 for KANGER’s upcoming EGM, the company proposed to complete the acquisition exercise of the building material supplier Sung Master. The way of settlement would be RM51.9 million in cash and RM42.7 million in new shares issuance.
Of course, issuance of new shares is not a problem for the company. How about the cash part?
In KANGER’s latest quarterly report, it clearly shows that the company had more than enough cash for the settlement of the purchase.
But the management would take this acquisition to another level.
As you can see, under the ordinary resolution 2 of the company, the existing key management and shareholder of the company – Mr. Kuah Choon Ching had showed an additional vote of confidence by agreed to subscribe 769,513,179 shares at 6 cents each to fund the acquisition.
In short, Mr. Kuah is very confident in the acquisition to invest over RM40 million into the acquisition.
Also, KANGER’s share price had actually bottomed at the current level. It seems like all risks are extremely low for now. What are your thoughts on the company?