This article first appeared in The Edge Financial Daily on October 25, 2018

Vortex Consolidated Bhd (+ve)

TRADING of shares in Vortex Consolidated Bhd (fundamental: 1.95/3; valuation: 0.9/3) triggered our stocks with momentum algorithm yesterday for the 10th time this year.

The stock closed up one sen or 11.77% at 9.5 sen yesterday, with 124.87 million shares done, much higher versus the counter’s 200-day average of 13.37 million shares.

Last week, on Oct 19, the IT company said it intends to raise up to RM54.89 million through a series of corporate exercises that involve a share consolidation, rights issue with warrants, and a rights issue of new irredeemable convertible preference shares.

On its share consolidation, it plans to consolidate every two existing shares into one, which would result in an adjustment to its share price.

For illustration, based on the company’s last transacted market price of 8.5 sen per share, the adjusted reference price would be 17 sen post-consolidation.

Vortex said it wants to use RM43.19 million of that to fund its property development project; RM6.5 million for future projects and acquisitions or investments; RM4 million for its working capital; and the remaining RM1.2 million to defray expenses related to the proposed corporate exercises.

Vortex is currently trading at 0.81 times its net book value.