SUBSCRIBER of the latest rights issue exercise of BSL Corporation Bhd, a precision metal parts and components manufacturer, can potentially reap reward from the heavily discounted offer price of the company’s right share at 5.5 sen/rights share, so claims an academician at a tertiary local institution.
Universiti Teknologi MARA’s (UiTM) Faculty of Management & Business’ lecturer Wan Mohd Farid Wan Zakaria said the issue price of 5.5 sen/rights share represents a discount of 5.5 sen from BCL Corp’s last traded price of 11 sen yesterday (Feb 13).
“Thus, for every subscription of 12 rights share, the subscriber would receive 12 times the discount of 5.5 sen which is equivalent to 66 sen,” he justified in a media statement.
“Moreover, for every subscription of 12 rights share, the subscriber will get five free warrants which can conservatively be trading at its intrinsic value of 5.5 sen (being the difference between BSL Corp’s share price of 11 sen and its exercise price of 5.5 sen).”
Added Farid: “The total worth of the five warrants is 27.5 sen (5 warrants x 5.5 sen). The exercise price of warrant is the amount warrant holders need to pay BSL Corp in order to convert the warrant into ordinary share.”
On that basis, Farid foresees a 93.5 sen or 141.67% profit on a 66 sen investment for the 12 BSL Corp’s rights shares.”
“The valuation is not too demanding. At 11 sen a piece, BSL Corp share price is supported by its net tangible asset (NTA) per share of 51 sen as reported by the company on Nov 30, 2022,” justified Farid.
NTA is described as the total assets of a company, excluding intangible assets (such as goodwill, trademarks and patents) minus total liabilities. In theory, the NTA per share value is used to determine the money that each shareholder would receive if the company sells all of its assets.
Therefore, NTA per share helps investors to judge whether a share price is over or under valued. In other words, NTA per share figure may indicate whether the share price accurately reflects the net assets held by the company.
In order to subscribe to the BSL Corp’s rights issue, investors must either own the company’s shares before their ex-date of Feb 7 or purchase the traded rights (stock code: BSLCorp-OR) before 5pm on Feb 21, according to BSL Corp’s prospectus dated Feb 8.
The closing time and date for acceptance and payment of the BSL Corp’s rights issue with free warrants is at 5pm on March 1 (Monday) while the listing date of the rights shares with free warrant is expected to be on March 15.
At the close of today’s mid-day trading, BSL Corp was up 0.5 sen or 4.55% to 11.5 sen with 10.22 million shares traded, thus valuing the company at RM224 mil. – Feb 14, 2023
