INVESTORS with shareholding in property developer OCR Group Bhd should contemplate participating in the company’s renounceable rights issue exercise of up to 1.34 billion new shares at an issue price of 3.5 sen/share.
Senior financial lecturer of Universiti Teknologi MARA (UiTM) Wan Mohd Farid Wan Zakaria based his ‘bullishness’ on the fact that the rights exercise comes with up to 1.34 billion free detachable warrants 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% discount from OCR Group’s current share price of 5 sen,” the academician who is attached to UiTM’s Faculty of Business and Management told FocusM.
“Then there will be two free warrants that come with every two rights share together whereby one can conservatively expect the warrant price to be listed at 1.5 sen.
“Therefore, the grand total is such that an investor can reap a 30% 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% discount or 3 sen (OCR was last traded at 5 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 (Monday).
For those investors who have yet to own the OCR Group’s rights shares (ie OCR-OR) but are interested in participating in the rights issue exercise, they may purchase the rights which is currently traded on Bursa Malaysia before Sept 13.
A search on OCR Group’s recent corporate activities reveals that the group had on April 24 entered into a deal with a landowner to jointly develop a residential project on 18.37 acres of freehold land in Templer, Rawang (Selangor) with an estimated gross development value (GDV) of RM313 mil.
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 (JV) agreement, the landowner, Lecca Properties (M) Sdn Bhd, has a minimum entitlement of RM45 mil for partnering with the developer, according to OCR Group.
Financial performance-wise, the group posted a multi-fold jump in its net profit for its 2Q FY2024 ended June 30, 2024 to RM2.38 mil (2Q FY2023: RM90,000) while its revenue climbed 42.2% to RM 46.37 mil (2Q FY2023: RM32.82 mil).
This enables OCR Group’s net profit for 1H FY2024 to soar to RM3.34 mil (1H FY2023: RM147,000) while its revenue gained 17.3% to RM80.64 mil (1H FY2023: RM68.72 mil). – Sept 8, 2024
