Hot Stock Bonia rises 6% on bonus issue, share split

by **Cals** Mon 28 Apr 2014, 13:14

Hot Stock Bonia rises 6% on bonus issue, share split

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Monday, 28 April 2014 12:08

KUALA LUMPUR (Apr 28): Bonia Corporation Bhd rose as much as 6% after the fashion retailer last week announced its bonus issue and proposed share split.

The proposed exercises will see Bonia undertake a one-for-one bonus issue and, subsequently, a two-for-one share split exercise.

At 11.56 am today, Bonia gained 26 sen or 5.3% to RM5.16. The second top gainer saw 363,700 shares exchanged hands. It earlier hit a high of RM5.20.

Analysts said they viewed positively the corporate exercises.

In a note, Affin Investment Bank Research said it upgraded Bonia's target price (TP) to RM5.45 from RM4.00, but maintained an ‘add’ call for the stock.

Taking into account the bonus issue and share split, the research house said the ex-all TP would be RM1.36.

“Backed by Bonia’s healthy earnings growth and ample reserves, we are positive on this announcement,’ said analyst Mandy Teh of Affin IB.

“We peg the stock at a higher target multiple in view of the corporate exercise which would definitely boost the stock’s liquidity.”

She said Bonia’s enlarged share base would jump four-fold to 806.3 million shares from 201.6 million shares, post the bonus issue and share split completion.

CIMB Investment Bank Research’s Nigel Foo said the bonus issue and share split exercises ‘could not have come at a better time’.

The CIMB IB analyst maintained his ‘add’ call and TP of RM8.11.

“We believe the increased number of shares and the relatively more affordable share price would generate more interest among retail investors,” said Foo.

“Consequently, this would boost the trading volume of the shares from its current level, which we believe will lead to a higher valuation for the shares.”

Meanwhile, Foo opined Bonia will be a ‘regionally recognised brand’, adding the firm has a clean balance sheet and an uncompromised focus on overseas expansion.