Analysts mildly positive on Sasbadi’s one-for-two bonus issue

KUCHING: Sasbadi Holdings Bhd’s (Sasbadi) proposed onefortwo bonus issue met with mildly positive sentiments and analysts believe that this move is intended to improve liquidity in the trading of Sasbadi shares.

The research team at AmInvestment Bank Bhd ( AmInvestment Bank) noted that the proposed bonus issue would result in the growth of Sasbadi’s share capital by 1.5folds to 419.1 million shares from 279.4 million shares currently.

The bonus issue will be capitalised from the group’s share premium account at the par value of 25 sen per share.

“As a result, there will be no impact to group shareholder’s fund as the reduction in share premium ( by RM34.9 million: 25 sen x 139.7 million bonus shares) would be offset by a corresponding increase to its share capital. Consequently, its net gearing will not be affected,” it said.

The research team opined, “We are mildly positive on this as it is intended to improve liquidity in the trading of Sasbadi shares.”

The average daily volume traded in Sasbadi shares year to date has fallen nine per cent to 0.59 million from the 2016 average of 0.65 million.

On the timeline for the exercise, the bonus issue is targeted for completion by end- September 2017.

“As a result, the change in the share base would only be reflected in the group’s financial year 2018 ( FY18) ending August 2018,” added.

All in, AmBank believed that Sasbadi’s earnings in the next half year and beyond would be anchored to the delivery of delayed book titles from 3QFY17, the ramp- up in sales from i- LEARN Ace ( for which its direct selling unit will complete its first year this month), and the steady stream of income from Ministry of Education contracts for school textbooks ( existing contracts stretch up to end- 2019).

It maintained a ‘ buy’ on the stock and a fair value of RM2.10 per share, with a theoretical ex- bonus issue fair value of RM1.40 per share premised on the same price earnings multiple, on the wider share base. it