A total game changer behind this construction stock.

Generally, normal investors would flee if they saw the price chart below. But in reality, this is a great opportunity to double, or even triple your investment.

Let me explain.

Moving forward, the stock that we will be discussing – AGESON BERHAD, shall go through a totality change in terms of shareholding structure.

First of all, the company will be consolidating 15 existing shares into 1 share via a consolidation exercise, obviously. As of today, there are 1.558 billion shares outstanding and 5.372 billion ICPS that will be consolidated into 103 million and 358 million shares and ICPS respectively.

The consolidation exercise will effectively reduce the supply of shares significantly from the market. Assuming a maximum pro-forma conversion of ICPS in the future, the maximum number of shares will still be in the range of 461 million, which is much, much lower than the current floating shares.

This exercise will allow the crippling of supply, which is beneficial for share price in most of the time. Investors may have bad impression of share consolidation in the past, but don’t forget even companies like VITROX CORPORATION BERHAD and PENTAMASTER CORP BERHAD had gone through an almost-bankrupt phase and had to consolidate their shares too.

Look at how they turnout now, even after the tech-crash in the market.

VITROX CORPORATION BERHAD – Share price is RM0.045 in 2006, more than 100x currently excluding dividends.

PENTAMASTER CORP BERHAD – Share price is RM0.145 in 2006, more than 19x currently excluding dividends.

I’m not saying that AGES will for sure replicate the same pattern, but at the very least, don’t judge a stock just by a corporate exercise.

There is also a second corporate exercise will be done by the company, which in my opinion, is extremely important too.

In the high interest rate environment to come, most construction or property developer are still sleeping around, while juggling with their debts. AGES had taken the initiative to proceed for equity funding in order to reduce the future costs of financing for the sake of investors. Of course, this includes the two major shareholders of the company who will be undertaking at least 50 million shares of the rights issue.

In other words, the key management cum largest shareholders will be re-investing into the company. Why do they do so?

Well, I would not say it is as noble to protect minority investors, but at least the end goal of major shareholders of AGES is same as us. They want the company to grow, and they are reducing costs of fund for us.

And aside from having consistent revenue and profit, they are also trading at a ridiculously low single digit PER.

Again, there is always mispricing in the market, and I’m surprised that the market had not discover AGES yet at this juncture. Which is, in my opinion, understandable given how bad the broad market performed.

Perhaps, the ultra-low valuation AGES is a salvation to the high interest rate environment.

If you have not invested in AGES yet, please, consider hedging your portfolio with one of the most consistent performing construction cum developer stock in Bursa, with low single digit PER. And if you are shareholder already, I do not see why you should vote against the proposal.

Hopefully, you are able to buy the stock by the time you saw this article.

Cheers.