Hot Stock TSH rises 3.4% on bonus issue

by **Cals** Tue 12 Aug 2014, 22:57

Hot Stock TSH rises 3.4% on bonus issue

Business & Markets 2014

Written by Meena Lakshana of theedgemalaysia.com

Tuesday, 12 August 2014 15:17

KUALA LUMPUR (Aug 12): TSH Resources Bhd rose as much as 3.4% on the plantation company’s proposed one-for-two bonus share issue.

At 3.04pm, TSH was traded at RM3.62 with some three million shares changing hands. The stock had earlier risen as much as 12 sen to RM3.69.

TSH, a Sabah-based company that operates in the palm oil, bio-integration, wood product manufacturing and forestation businesses, has proposed a bonus issue of 451 million new shares on the basis of one bonus share for two existing shares held.

In a Bursa Malaysia filing yesterday, TSH said the proposal was made to reward shareholders and enlarge the number of the company’s shares.

In a report, Public Investment Bank has positively rated the proposal, saying it will improve TSH's share price in the long term.

Public Investment said the proposal was positive for TSH as the latter's thin trading volume has been a drag on investor interest.

“Given the strong fundamentals and attractive growth prospects, we believe the higher liquidity would be beneficial to the share price in the long-term.

“No changes to our valuations as we reiterate our neutral call on the company with an unchanged target price (TP) of RM3.52 based on 19x FY15 price/earnings ratio,” Public Investment said.

Although the enlarged share capital is expected to facilitate trading liquidity of TSH shares on Bursa Malaysia, Public Investment said the proposed bonus issue would have a dilutive impact on TSH figures for financial years ending December 31, 2014 (FY14).

But the exercise will have no impact on TSH's valuations as its share price will adjust accordingly.

“Based on the enlarged share capital of 1,345 million shares (excluding treasury shares), our forecasted FY14 earnings per share (EPS) will be lowered to 12.3 sen from 16.9 sen.

“Based on yesterday’s closing price, the theoretical share price will be adjusted to RM2.38 while our ex-bonus TP is adjusted to RM2.34,” it added.