Hot Stock CMSB soars with okay for share split/bonus issue and high ratings; new CW listed

by **Cals** Wed 16 Apr 2014, 00:30

Hot Stock CMSB soars with okay for share split/bonus issue and high ratings; new CW listed

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Tuesday, 15 April 2014 12:41

KUALA LUMPUR (April 15): Shares of Cahya Mata Sarawak Bhd (CMSB) surged after the company announced that its proposals on share split and bonus issue have gained official approvals.

The Sarawak company, controlled by the family of Tan Sri Abdul Taib Mahmud (formerly the Chief Minister of Sarawak), was also assigned corporate credit ratings of AA3/stable/P1 by RAM Ratings yesterday.

And today, Maybank Investment Bank Bhd announced it is issuing 100 million units of new European style cash-settled call warrants (CW) over ordinary shares of CMSB and they will be listed today. It has given CMSB a target price of RM10.50.

“For us, the stock rise has got to do with its share split and bonus issue. Warrants help too. CMSB’s proposal of a one-into-two share split followed by a one-for-two bonus issue will attract more retail participation,” said Sam Ng, a senior remisier with Inter-Pacific Securities Sdn Bhd.

At 11.59 am today, CMSB – the top gainer – jumped 50 sen or 5.4% to RM9.70 on trades of 588,900 shares.

Other Sarawak stocks linked to the company also rose to gain places in the top-10 risers. These included Naim Holdings Bhd (up 19 sen or 5% at RM4.02) and Press Metal Bhd (up 13 sen or 4.4% at RM3.10).

Yesterday, CMSB announced that Bursa Malaysia Securities had approved its proposed share subdivision and the listing of and quotation for the bonus shares on the Main Market.

The share split will increase the ordinary shares of CMSB from 340.3 million to 680.6 million, and together with the bonus issue, CMSB’s ordinary shares will be further increased to1.02 billion units.

Yesterday, RAM Ratings announced it has assigned corporate credit ratings of AA3/stable/P1 to CMSB.

CMSB started off as a cement manufacturer in Sarawak and has since expanded into various other businesses including the trading of construction materials, road maintenance, construction and property development.

In its rating statement, RAM said: “The ratings reflect CMSB’s dominant market position in Sarawak as the sole integrated cement manufacturer…The ratings also reflect the group’s superior balance sheet and strong debt-protection metrics.”

“CMS’s debt load declined significantly to RM100.10 million as at end-2013 (from RM543.24 million as at end-2009), translating into a strong gearing ratio of 0.05 times. Coupled with a cash hoard of RM613.71 million, CMS was in a net-cash position – a position it has retained in the last 4 years.”

Maybank IB, in a statement today, said CMSB is the closest proxy to the growth potential of Sarawak’s economy arising from its significant business interest in Sarawak and Sarawak Corridor of Renewable Energy (SCORE).

“CMSB is expected to benefit significantly from the SCORE. With the proposed 2-for-1 share split and a 1-for-2 bonus issue, trading liquidity and affordability of CMSB shares is expected to improve,” it said.