Hot Stock Press Metal hits all time high on share split & bonus issue plan

by **Cals** Tue 12 Jul 2016, 20:51

Hot Stock

[size=28]Press Metal hits all time high on share split & bonus issue plan

By Gho Chee Yuan / theedgemarkets.com | July 12, 2016 : 11:59 AM MYT

KUALA LUMPUR (July 12): Shares in Press Metal surged to its all time high this morning, after it proposed a share split and bonus issue as part of an internal reorganisation that will see a new entity assume its listed status.

At 11.11 a.m., the stock gained four sen or 1.02% at RM3.98, after having hit a high of RM4.03 in early trades.

Some two million shares were exchanged between RM3.93 and RM4.03. The current price values it at RM5.18 billion.

The country's largest integrated aluminium producer told stock exchange yesterday that the share split involves the subdivision of its 50 sen shares into two shares of 25 sen each.

The bonus issue, meanwhile, will comprise up to 1.154 million new subdivided shares to be offered on the basis of two bonus shares for every five subdivided shares.

In a flash note to clients today, Kenanga Research analyst Voon Yee Ping was positive on the proposal, as it improves share liquidity, while the reorganisation will further streamline operating segments and taxation structure.

Voon maintained her core earnings forecast for financial year 2016 and financial year 2017 at RM343 million and RM457 million respectively.

She reiterated her Outperform call as she believes the company's shares are likely to continue re-rating, in view of its latest capacity expansion (Samalaju Phase 3), which raises FY17 total smelting capacity by 27% to 760,000 metric tonnes per year.

As a result, she raised the target price to RM4.21 (ex-split/bonus TP of RM1.50) from RM3.65, based on a higher forward price to earnings ratio of
12.7 times, from 11 times applied to unchanged FY17 forward derived earnings per share of 33.2 sen per share (ex-split/bonus: 11.8 sen).
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