KUALA LUMPUR: RHB Research is maintaining its Underperform call on Hiap Teck Ventures Bhd while the indicative fair value is maintained at RM1.18 based on 7x CY11 EPS of 16.9 sen.
The research house said on Monday, Jan 31 that Hiap Teck has proposed a rights issue to raise gross proceeds of up to RM218.9 million (at an indicative basis of one-for-one and rights price of 68 sen).
In addition, Hiap Teck has also proposed to issue up to RM180 million nominal value of convertible bond, with coupon rate and conversion price to be determined later.
'Ceteris paribus, the RM391.6 million net proceeds (both equity and debt) will overall reduce Hiap Teck's net debt and net gearing of RM269.8 million and 0.4 times as at Oct 30, 2010 to RM58.2 million and 0.1 times,' it said.
RHB Research said the new shares from the rights issue will dilute Hiap Teck's FY07/12 EPS by 43% from 17.6 sen to 10 sen.
The net proceeds from its rights issue and convertible bond issue will mainly be used to fund the Phase 1 of its RM750 million blast furnace plant in Kemaman, Terengganu.
'Forecasts maintained, pending the completion of the rights issue and convertible bond issue. Indicative fair value is maintained at RM1.18 based on 7x CY11 EPS of 16.9 sen,' it said.
The research house said on Monday, Jan 31 that Hiap Teck has proposed a rights issue to raise gross proceeds of up to RM218.9 million (at an indicative basis of one-for-one and rights price of 68 sen).
In addition, Hiap Teck has also proposed to issue up to RM180 million nominal value of convertible bond, with coupon rate and conversion price to be determined later.
'Ceteris paribus, the RM391.6 million net proceeds (both equity and debt) will overall reduce Hiap Teck's net debt and net gearing of RM269.8 million and 0.4 times as at Oct 30, 2010 to RM58.2 million and 0.1 times,' it said.
RHB Research said the new shares from the rights issue will dilute Hiap Teck's FY07/12 EPS by 43% from 17.6 sen to 10 sen.
The net proceeds from its rights issue and convertible bond issue will mainly be used to fund the Phase 1 of its RM750 million blast furnace plant in Kemaman, Terengganu.
'Forecasts maintained, pending the completion of the rights issue and convertible bond issue. Indicative fair value is maintained at RM1.18 based on 7x CY11 EPS of 16.9 sen,' it said.
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