Bonus Issue

Perak Transit (Ptrans) proposed to undertake a bonus issue of up to 433.6mn new shares on the basis of 1 bonus share for every 2 existing Ptrans shares held on an entitlement date to be determined later. According to announcement, the proposed bonus issue serves to reward the existing shareholders for their continued support to Ptrans.

Our View

We are mildly positive on the proposed bonus issue as this exercise may encourage warrant conversion for bonus share entitlement. The warrant has a strike price at 0.75, which is in the money, and warrant conversion will bring additional capital to the company. The additional capital can be used to finance the construction of a new integrated bus terminal in Tronoh.

In addition, the proposed bonus issue would likely increase the share liquidity further. Based on our target price of RM1.59, the ex-bonus price will be adjusted to RM1.06.

Forecast

No change to our FY23-25 EPF and DPS forecast, pending completion of the proposed bonus issue.

Valuation

We maintain Perak Transit’s SOP valuation at RM1.59/share (Figure 1). Maintain Buy on Ptrans.

Source: TA Research - 8 Jan 2024