WCT advances on bonus issue, warrants plan (9679)

KUALA LUMPUR: Shares of WCT Bhd
advanced in early trade on Friday following its corporate proposals but
gains were limited due to the cautious market sentiment after the sharp
pullback on blue chips.
At 9.20am, WCT was up 10 sen to RM2.64. There were 123,000 shares done.
The
FBM KLCI fell 0.81 of a point to 1,617.18. Turnover was 98.52 million
shares valued at RM84.12mil. Gainers beat losers 248 to 52 while 129
counters were unchanged.
WCT had on Thursday proposed a bonus
issue on the basis of three bonus shares for every 20 existing 50 sen
shares held and one warrant D for every five shares held on the
entitlement date.
RHB Research
Institute said an investor who owns 1,000 WCT shares will end up with
1,150 WCT shares and 200 WCT-WD warrants after the exercise.
At an indicative strike price of RM2.25, the new warrants will dilute WCT's existing fully-diluted FY12/13 EPS by another 6.2%.
"We
are neutral on the exercise as we hold the view that, assuming the
market is efficient, the issuance of bonus shares and warrants should
not create additional financial value to the company, or in other
words, it should be a zero-sum game. Fair value is RM2.17. Maintain
Underperform," it said.