For a small company, directors could not be buying 10% shares without pushing up the price. If they subscribe for PP,they can secure at least 10% without affecting the movement of share price. Most of PP is carried at lower price than market.
But if they can rope in new investors for PP, i.e ex IHH boss, the share market would benefit from news.
Benng6197, no, buying share from open market doesn't fit the company's goal. The company needs private placement is because they see potential in certain business area. In order to execute the plans the company needs more capital, which is why they raise fund for it.
So, e.g. if Directors take 20mil from their pocket and pump into the company, the market capital will increase from 102mil to 122 mil. And yes, the EPS will decrease from 0.53 to 0.44 cent if the nett profit remain the same in the near future.
But if they can utilize this fresh 20mil to expand current business to significantly bring up the nett profit, the margin will be huge. Bear in mind that the ROE for now is 34.78%, which is pretty decent in the market now.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
peterchua
41 posts
Posted by peterchua > 2019-06-17 10:54 | Report Abuse
For a small company, directors could not be buying 10% shares without pushing up the price. If they subscribe for PP,they can secure at least 10% without affecting the movement of share price. Most of PP is carried at lower price than market.
But if they can rope in new investors for PP, i.e ex IHH boss, the share market would benefit from news.