1-for-5 Bonus Issue and 1-for-20 Bonus Warrants

Supermax Corporation Berhad (Supermax) has proposed a bonus issue of: i) up to 544.1mn new shares on the basis of 1 bonus share for every 5 existing Supermax shares held on an entitlement date to be determined later, and ii) 163mn free warrants on the basis of 1 warrant for every 20 Supermax shares, which will be determined after the bonus shares entitlement date. The warrant will be issued at no cost to the entitled shareholders of Supermax and will have a duration of 5 years. The exercise price of the warrant will be determined at a later date. The proposals are expected to be completed by the 1Q25.

Utilisation of Proceeds

For illustration purposes and based on an indicative exercise price of RM1.00, the exercise could potentially raise RM163.2mn, which can be utilized for future working capital.

Our View

We are mildly positive on the proposed exercises. The proposed bonus issue serves to reward the existing shareholders for their continued support to Supermax. In addition, the proposed bonus issue would likely increase the share liquidity further.

Meanwhile, the free warrants would allow shareholders to further increase their equity participation in Supermax and benefit from any potential capital appreciation arising from the exercise of the warrants.

Impact

No change to our FY25-27 forecast, pending completion of the exercises.

Valuation

Maintain Buy on the stock with a TP of RM1.37 based on 0.8x FY26 P/B.

Source: TA Research - 19 Dec 2024