The potential delisting of Perisai next month shows the risk of investing in a PN17 company. For Eka Noodles Berhad the reason for the company to fall into PN17 is the same as Perisai. Its shareholders’ equity is currently at -RM28.96mil (yes negative equity. Theoretically when you buy this company shares, you actually owe creditor 9 sens per share. You don’t own asset but debt).
As of Sept 18, the company has total debt of RM 72mil and only total cash of only RM8.7mil. They actually have a restructuring plans already to bring the company out of the PN17 status. Below is the summary:
1) There will be a right issue exercise for the current shareholder. For every 1 share, the shareholder is entitled to subscribe to 5 new shares at RM0.05 per share. Basically, here you need to be prepared to add up to at least another RM0.25 for every share that you have now. If you don’t subscribe to the right issue then you will get diluted. The right issue is expected to raised RM108mil.
2) The company will then use the proceed from the right issue to pay the debt. In total RM38mil will be used to pay the debt. Other debt amounting to RM31mil will be paid via the issuance of new shares at RM0.05 (or 620mil new shares) which means you will then get diluted.
3) Then the company will buy another company called Kepala Batas Bihun Sdn Bhd at a price of RM55mil of which RM33mil to be paid by cash (from the right issue) and the rest by new shares at RM0.05 (or 440mil new shares). This again will dilute your position even further but will bring in profit to the company in the future. The vendor is guaranteeing a profit of RM8mil in FY19 which is actually not that bad if the profit can maintain at the level for the foreseeable future. At that level, the company after all the new shares issuance, will be valued at 8.6x forward PE. Which is not that expensive.
Upon completion of all this exercise, the company should be able to lift itself out of the PN17 status. But investors need to be prepared to basically add in an addition 25 sens per share into their current investment. In summary, when you buy Eka shares now at 6 sens, your total cost is actually supposed to be 31 sens per share to take into account the future right issue.
If you are looking to diversify your portfolio outside of EKA (due to the uncertainties from the regulation plans) I would recommend you to look at MBMR.
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.5x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.6x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.
For FY19 growth will be driven by the still high demand of new Myvi and the newly launched SUV and also the new Alza in 2H19.
Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. Most analysts have a TP of above RM3 for the company with Hong Leong being the lowest at RM3.13 and Maybank the highest at RM4.50.
I wait for this counter to exit PN17 , my neck also dam long oredi . unlike RGT BHD, oredi achieved two q continuous profit, can apply for PN17 exit upon Q result announcement.
ini laa kisah si pak tua nelayan gila.. buat hal bikin orang pening kepala.. hadap ombak keling keling. bila reda kaching kaching... kaut sikit sikit. kalau ombak besar buang balik hanya tinggal sikit..
itulaa dia nelayan gila paktua sorang.. bila orang datang.. dia lari lintang pukang.. hadap ombak keling keling. bila reda kaching kaching... kaut sikit sikit. kalau ombak besar buang balik hanya tinggal sikit..
bila berita tersebar buruk buruk..itulaa masa dia masuk lubuk.. bila datang berita baik baik..itulaa masa dia cabut balik.. hadap ombak keling keling. bila reda kaching kaching... kaut sikit sikit. kalau ombak besar buang balik hanya tinggal sikit..
jangan takut ombak jika ingin jadi nelayan... tapi jangan berani lawan ombak jika hanya pakai sampan. hadap ombak keling keling. bila reda kaching kaching... kaut sikit sikit. kalau ombak besar buang balik hanya tinggal sikit..
hadap ombak keling keling. bila reda kaching kaching... kaut sikit sikit. kalau ombak besar buang balik hanya tinggal sikit..
hadap ombak keling keling. bila reda kaching kaching.. . hadap ombak keling keling. bila reda kaching kaching...
hadap ombak keling keling. bila reda kaching kaching... he he
frankly.. old man always play with pattern.. an every chaos always has a pattern.. an every pattern always has a rhythm.
always ride closely with his rhythm.. know the limit and how to release the burden..
a little profit is a bit more worth it .. rather than the huge loss..
Eka going up. What's wrong with these investors. One sifu mention it goes up. PN17 stock. He is laughing because he buy cheap, and the dungus give him money.
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Posted by Yang Addison > 2018-12-24 12:19 | Report Abuse
any news now?