Oil prices rose more than 2% on Thursday, turning positive as OPEC and its allies said the producer group would crack down on countries that failed to comply with output cuts and planned to hold an extraordinary meeting in October if oil markets weaken further. After falling early in the session amid bearish jobs numbers and a ramp up in Gulf of Mexico oil output following Hurricane Sally, crude benchmarks reversed course to gain on the day, bolstered by comments from OPEC.
No formal announcement yet means price will likely to continue to rally. Rumours have resurfaced that Melewar might privatize Mycron but at what price? Monday will either see a short price consolidation or another speedy climb up of price on huge buying volume like on Tuesday and Friday. My feeling is that price will eventually run far.
To take private unlikely. My speculation is Melewar might sell Mycron or a new partner come in. It will interesting to watch. If that happen Mycron will move above one ringgit.
Melewar owns more than 74% of Mycron, its only significant subsidiary. Without Mycron, Melewar is nothing as the other subsidiaries contribute little profits. Only about 85 million shares are held by minority shareholders. On Friday volume traded hit almost 24 million shares (20 million in the first session and 4 million in the second session) and share price after racing to a the peak of 69 sen did not fall below 63.5 sen. This indicates that the selling by stale bulls (retailers who were stuck at above 60 sen) and profit taking (by retailers who bought below 60 sen) were well absorbed.
If Melewar sells off Mycron as someone speculated, Melewar will be without an adequate business and will fall into PN17 classification as has happened to MAA (a related company of Melewar) several years ago resulting in all investment funds exiting from MAA as investment funds are barred from investing in PN17 classified companies, causing market price to collapse. Mycron despite having recording impressive earnings have not declared any dividend since December 2010, more than a decade ago! My hunch is that Melewar preserved Mycron's increasing cash balance to utilize it to buy out the 85 million shares owned by the minority shareholders via a Selective Capital Repayment (SCR). Mycron's cash balance has ballooned to RM110 million at end of December 2021.
A privatisation of Mycron by Melewar at a fair price to minorities would be a win-win situation to both Melewar and Mycron's minority shareholders. Melewar gets complete 100% control of Mycron, the 26% balance taken over will enhance Melewar's own NTA. Minority shareholders get to exit at a fair price above the market price. In order to have sufficient take-up rate of any SCR, the offer price has to be above the highest market price in the last 12 months.
The above argument provides the logic behind the rise of the both market prices of Mycron and Melewar as both shareholders benefit from this arrangement should it be proposed.
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....
hoot9e996
1,813 posts
Posted by hoot9e996 > 2022-04-15 09:40 | Report Abuse
see trap or ROCKET haha