Kuala Lumpur: Investors with shares in property developer OCR Group Bhd have been adviced to contemplate participating in the company's renounceable rights issue of up to 1.34 billion new shares at an 3.5 sen each.
Universiti Teknologi Mara senior financial lecturer Wan Mohd Farid Wan Zakaria is bullish on this given that the rights exercise comes with up to 1.34 billion free detachable warrants.
This is on the basis of two rights shares with two warrants for every three existing OCR Group
shares held by the entitled shareholders as of Sept 5.
"It's all about simple arithmetic whereby the right issue offer price of 3.5 sen entails a 30 per cent discount from OCR Group's current share price of 5.0 sen," said the academician, who is attached to UiTM's Faculty of Business and Management.
"Then there will be two free warrants that come with every two rights share together whereby one can conservativelyexpect the warrant price to be listed at 1.5 sen.
"Therefore, the grand total is such that an investor can reap a 30 per cent or 1.5 sen off from one rights issue share discount in addition to a further 1.5 sen from the free warrant (two rights shares with two warrants) – all for a total of 60 per cent discount or three sen," he explained.
OCR was last traded at 5.0 sen on Sept 6.
It remains to be seen if an academician like Wan Farid can leverage his mathematical wizardry to be as good as a stock market analyst.
But it is worth noticing that the last date and time for acceptance and payment for the provisional allotments and the excess rights shares with Warrants E is 5pm on Sept 23.
Investors who have yet to own the OCR Group's rights shares can buy the shares which are currently traded on Bursa Malaysia before Sept
13.
OCR Group had on April 24 entered into a deal with a land owner to jointly develop a residential project on 18.37 acres of freehold land in Templer, Rawang with an estimated gross development value of RM313 million.
The project comprises of 118 semi-detached houses, 37 bungalow lots, and five shoplots, the property developer said in a bourse filing.
Under the joint-venture agreement, the landowner LeccaProperties (M) Sdn Bhd has a minimum entitlement of RM45 million for partnering with the developer, according to OCR Group.
Financial performance-wise, the company posted a multi-fold jump in its net profit for its second quarter ended ended June 30, 2024 to RM2.38 million (2Q FY2023: RM90,000) while its revenue climbed 42.2 per cent to RM 46.37 million (2Q FY2023: RM32.82 million).
This led to a net profit of RM3.34 million in the first half FY2024 from a net profit of RM147,000 previously.
Its revenue gained 17.3 per cent to RM80.64 million from RM68.72 million a year ago.