REMEMBER the nursery rhyme “Rain, rain, go away … Come again another day …”?
With a bleak economic outlook stemming from the ‘unbreakable’ COVID-19 chain, surely no businesses would wish to have anything to do with the ‘taxman’ who can somehow be equated to the deadly Delta variant which is fast becoming dominant in many countries.
Nevertheless, an unpleasant encounter with the dreaded taxman a.k.a Director-General of Inland Revenue Board (IRB) is inevitable for AME Elite Consortium Bhd (AME) as its wholly-owned subsidiary AME Development Sdn Bhd has been slapped with RM7.2 mil in additional income tax and penalty for the assessment year 2018.
In a Bursa Malaysia filing yesterday (July 5), the company said it was served with a notice of additional assessment by the IRB mainly pursuant to the dispute on the withdrawal of stocks as investment properties.
Although the additional tax assessment from IRB may impact on the company’s cash flow and war chest of its balance sheet, Malacca Securities Research is neutral on the matter for the time being.
“The impact will be negligible given that it will only reduce less than 1.0% of our annual earnings forecast from to the lower interest income as a result of the potential reduction of cash and bank balances,” projected analyst Kenneth Leong in a company update.
“Also, we are assured that AME will have adequate cash flow to maintain its on-going operations, supported by a solid cash and bank balances of RM271.4 mil in FY2021.”
In an unrelated development, Malacca Securities Research noted that AME’s one-for-two bonus issue proposal (with one free warrant for every three existing AME share) has been submitted to Bursa Malaysia recently.
“We deem the move to be positive to reward existing shareholders as well as enhance the trading liquidity,” opined the research house. “Also, AME has proposed for an establishment of an employees’ share option scheme of up to 10% of the total number of its issued shares.”
All-in-all, Malacca Securities Research made no changes to its earnings forecast pending the final decision from the Court of Appeal. “Therefore, we maintained our “hold” recommendation on AME with an unchanged target price of RM2.57,” added the research house.
A 9.21am, AME was unchanged at RM2.60 with 209,400 shares traded, thus valuing the company at RM1.11 bil – July 6, 2021
