This article first appeared in The Edge Financial Daily on April 16, 2018

CCK Consolidated Holdings Bhd
(April 13, RM1.37)
Maintain add with a target price (TP) of RM1.86: CCK Consolidated Holdings Bhd (CCK) has announced a proposal to split every existing share into two ordinary shares. This will be followed by plans to issue one free warrant for every two subdivided shares. In total, its share base will increase by threefold to 946.1 million from 315.4 million currently (assuming full exercise of all warrants in a period of five years). The entitlement date for both proposals will be determined later.

There is no direct fundamental change from the proposed one-for-one split. However, this is positive in terms of increasing its trading liquidity and enlarging its shareholder base. CCK has highlighted that the issuance of free warrants (one for every two shares post the one-for-one split) was mainly to reward shareholders. This will allow investors to participate in CCK’s convertible securities without incurring any additional cost. In total, it will be issuing 315.4 million new warrants. The price of the new warrants will be determined at a later date but will be mainly based on the five-day volume weighted average market price of CCK shares with a discount and premium to be determined later based on market-based principles.