This counter AKNIGHT (9954) in BSKL has recently caught my attention after the completion of its rights issue with free warrants, which had a subscription rate of 98.1%.

Interesting points about the rights issue

1. 88.87% of the money raised was used to acquire a 60% stake in a profitable company which is Rapid Growth Technology Sdn Bhd.

My take : This is a positive sign, as the money is used for growth of company instead of paying debts or operation costs.

2. RGT has provided a profit guarantee that the Profit After Tax (PAT) of RGT shall not be less than RM 20 million for FYE 31 December 2017 and December 2018 in aggregate. Any shortfall from the profit guarantee shall be settled in cash.

My take : This acquisition will be an important turnaround in AKNIGHT's finances. AKNIGHT has been in loss for the past 6 quarters. Upon completion of this right issue, RGT will start to contribute to AKNIGHT's bottom line and this could be reflected in the upcoming quarter report for August FY2018.

3. Post acquisition, the enlarged group will be principally involved in a more comprehensive range of plastics manufacturing services.

My take : Acquistion of RGT synergizes with current business operation of AKNIGHT as RGT is also in the same industry, but with different set of skills and abilities. Therefore the new AKNIGHt shall be able to expand its range of products and services to clients.

Theoretical future value of AKNIGHT post acquisition

So now the big question is, what will AKNIGHT be worth in future? Well..I can't answer this question right now. However, looking ahead for the next 2 quarter reports, I foresee AKNIGHT reporting profits instead of losses and therefore on track to be uplifted from PN17 status as early as end of this year.