Giving MGRC A Chance - Risk or Revenue?

On Tuesday, April 18, a leading genomics and biopharmaceutical company Malaysian Genomics Resource Centre Berhad (MGRC) announced to undertake a private placement of up to 7,000,000 new MGRC Shares. This would raise up to RM3.85 million that would be used towards future investments and working capital.

On April 24, The Edge ‘spoke frankly’ that MGRC may have too many private placement exercises, hinting that over the past 12 financial years, MGRC’s earnings performance has not been that great, with shades of red and green since its listing 2011.

As at LPD, MGRC’s issued share capital is RM56.7 million.

Let us discuss MGRC’s recent placements:

On 8 July 2022 - of which we will call this Private Placement 2022 (PP 2022) – MGRC announced a private placement of up to 10% of the total number of shares, raising gross proceeds of RM4.03 million. The utilization of these proceeds vary over future viable investment, purchase of equipment and estimated expenses.

On 24 February 2021 – we will dub this Private Placement 2021 (PP 2021) – MGRC announced a private placement involving the issuance of up to 20% of the total number of issued Shares, raising gross proceeds of RM24.2 million. The utilisation of these proceeds include working capital for existing business; haemodialysis business; capital expenditure and for covering expenses. Further elaboration of these details cover staff costs (salaries, EPF, SOCSO, etc), administrative expenses, marketing expenses and acquisition of Aquahealth Sdn Bhd, along with their advances such as setting up the dialysis centre (including renovation, purchasing equipment and initial general working capital).

Needless to say, MGRC is in the business of biopharmaceuticals and genomics, with an impressive number of strategic collaboration agreements ranging from partnerships in the Middle East, renowned local football club KL City FC; Kensana Health and MAHSA University on Cannabinoid R&D; offering the world’s first DNA-driven fertility test with Divine Genes Sdn Bhd; SIRIM Malaysia; and signing LOI’s in Sabah and more. Each of these collaborations require expansive and extensive capital as you ‘need to spend money to make money’ and MGRC is carefully yet confidently investing in the Company what you give to them.

They say Rome wasn’t built in a day – so with the various collaborations, give MGRC time to bear fruit and it will. We will give them time to not only regain their footing, but to also find their bearings and then we shall see if there is any improvement in their financial results (or not).