Hot Stock Hubline active, tumbles 25% on proposed restructuring plan

by **Cals** Tue 09 Jun 2015, 08:22

Hot Stock
Hubline active, tumbles 25% on proposed restructuring plan

KUALA LUMPUR (Jun 8): Loss-making logistic firm Hubline Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) topped the most active trading list across Bursa Malaysia securities today, on proposed restructuring plan.
As of 10.48am in the morning session, the counter fell half sen or 25% to 1.5 sen per share, trading volume was 32.52 million shares, the most traded stock.
A remisier, when contacted, told theedgemarkets.com that investors are positive on the group’s restructuring plan.
“They saw trading opportunities with the stock after the restructuring plan proposed earlier,” he said.
To recap, Hubline (fundamental: 0.2; valuation: 0.9) announced on Bursa Malaysia that it has proposed a rights issue and a private placement that are expected to raise about RM93.99 million.
Hubline said the gross proceeds of RM93.99 million was based on the assumption of 1 sen per share for both the rights issue and private placement.
Hubline said 51% or RM48 million of the proceeds raised will be used to repay debt, while 46% or RM43.65 million will be used as working capital; the remaining 3% or RM2.34 million will be channelled to corporate exercise expenses.
Its total borrowings are expected to drop 21.3% to RM176.75 million, from RM224.7 million currently upon completion of the exercise.
Prior to that, the group had also announced that it is exiting the container shipping business as it views the container liner industry to be suffering from an economic crisis as well as bloated by overcapacity.
The exit will have a one-off costs of RM350 million in its current financial year ending Sept 30, 2015 (FY15), it told Bursa.
It said the losses incurred by its container shipping division over the last few years has forced it to reassess its financial and operational strategies, adding that its continued participation in the container shipping market without immediate turnaround plan will eventually "harm" the profitable operations of its break bulk division.
Hubline added that its break bulk division has the potential to develop and grow without being challenged by the pressures of subsidising the container shipping division.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)