KUALA LUMPUR: Analyst are are cautiously optimistic over Daya Materials Bhd's (DMB) restructuring and turnaround efforts.
However, Public Investment Bank Bhd (PublicInvest) said it will reserve comments until details of the full plan are available.
"The one significant encouragement remains that the company is profitable operationally," PublicInvest said in a note.
While the target price for the stock remains under review, PublicInvest maintains its Neutral call for DMB with earnings estimates continue to have significant downside biases.
To recap, DMB announced a debt restructuring exercise last Friday, and incidentally, it is also a precursor to its PN17 regularisation plan.
The exercise will involve a proposed capital reduction exercise and a proposed rights issue of new shares with free detachable warrants amongst others.
Under this present RM32.46 million deal, 534 million new shares will be issued at 2.5 sen per share to Perfect Propel Sdn Bhd (PPSB) in place of RM13.35 million in debt assumed, while RM18.69 million will be set-off against subscriptions from the proposed rights issue while RM0.42 million will be satisfied in cash.
PublicInvest said with RM246.12 million in total borrowings as at 30 September 2018, and in particular RM83.1 million in redeemable convertible unsecured bonds already due, one can expect a significant ballooning of its share base when the full regularisation plan is announced.