Hot Stock XingHe Holdings active after securing Macquarie Bank as new investor

by **Cals** Fri 03 Oct 2014, 02:12

Hot Stock XingHe Holdings active after securing Macquarie Bank as new investor

Business & Markets 2014

Written by Liew Jia Teng of theedgemalaysia.com

Thursday, 02 October 2014 13:25

KUALA LUMPUR (Oct2): Shares of XingHe Holdings Bhd continue to be heavily traded as one of the most-active stocks on Bursa Malaysia today, as the China-based peanut oil producer has on yesterday secured Australia’s Macquarie Bank Ltd as its substantial shareholder.
More than 15.693 million XingHe shares were traded by the close of morning trading session today, while its share price declined 1 sen or 4.3% to 22.5 sen. It was traded between 22 sen to 24 sen in the morning trade.
Worth noting is that with more than 68 million shares done yesterday, XingHe’s trading volume has reached its highest level since the counter made debut on the ACE Market of Bursa Malaysia in late April 2014, after completing a reverse takeover of Key West Global Telecommunications Bhd.
Yesterday, XingHe told the stock exchange that it will grant 2.34 million call options to Macquarie Bank, entitling the international bank to subscribe 234 million new shares or 9.96% stake in the company.
The gross proceeds to be raised from the proposed arrangement is up to RM46.8 million, based on the minimum commitment amount of RM25 million by Macquarie Bank, assuming that the entire 234 million shares are issued at 20 sen apiece. The proceeds will be used for business expansion.
Meanwhile, XingHe also proposed a bonus issue of up to 1.29 billion warrants on the basis of one warrant for every two existing shares. Based on the exercise price of 15 sen, XingHe is expected to raise some RM193.7 million.
A market analyst from a local research house told theedgemalaysia.com that the issuance of new shares to Macquarie Bank could result in earnings dilution.
“Macquarie Bank has committed to pump in at least RM25 million within six month, but the new factory of XingHe will only make earnings contribution about two to three years later. In another word, the earnings per share could be diluted,” he said.
To recap, XingHe planned to lead a 400 million RMB (RM210 million) investment in China to build a manufacturing plant for peanut protein powder production.
The new expansion project will start in the first half of 2015, after the group successfully identifies a joint-venture (JV) partner.
It also plans to make greater investment of 1 billion RMB (RM530 million) to further develop the peanut protein powder, which will be upgraded from food grade to pharmaceutical grade in a later stage.