With reference to the AYS price chart below, on 15 October, AYS share price was 88 sen when the company announced share placement of 38 million shares at 76 sen each to big investor who knew the company operation and its profit growth potential. No investor would buy 38 million AYS shares unless he knows the company’s business and its management.

How is the share placement price fixed?

According to Security Commission rule, the placement price should not be less than the average price in the last 5 trading days with a maximum discount of not more than 10%.

Ever since the share placement announcement, its share price has been dropping from 88 sen to close at 63 sen yesterday. It is selling below its share placement price of 76 sen. It is so ridiculous.

There are 2 reasons why the price dropped below its share placement price of 76 sen.  

1 The Budget 2022 proposal of increasing windfall tax from 24% to 33% if the company’s annual profit exceeds Rm 100 million. This has depressed practically all the listed stocks including AYS.

2 AYS announced reduced profit of 6.51 sen EPS in its  2^nd quarter ending Sept. Its 1^st quarter ending June was 8.5 sen. All investors do not like to see reduced profit. 

My advice:

Since the quarterly results are not audited, the company management could have made small adjustment without violating the listing rules. For example, by writing down the value of old stocks. The company could have reported less profit in its 1^st quarter and more profit in its 2^nd quarter. During the 2^nd quarter, the company would have made more profit when the company used the cheaper stocks to product steel products for sale.  

I must to tell you my background so that AYS management will take my advice seriously.

I was a co-founder of Mudajaya, Gamuda, IJM Corp, Rubberex, MBM Resources etc. Moreover, I was a director of the Board of Engineers Malaysia for 3 terms, Member of Malaysian Standard Committee for Cement and Concrete and Secretary General for Master Builders Association for 9 years.