This article first appeared in Capital, The Edge Malaysia Weekly on April 17, 2017 - April 23, 2017

ANZO Holdings Bhd’s shares skyrocketed on the back of a surge in trading interest in the past month, reaching as high as 60.5 sen last Thursday before settling at 60 sen — a level it last saw in May 2012.

That marks a gain of 140% for counter that has languished below 25 sen for the past year due to little or no trading activity.

The sudden increase in trading activity prompted an unusual market activity query from Bursa Malaysia on March 28, to which the company — which was formerly known as Harvest Court Industries Bhd — responded that it was unaware of the cause.

Barely a fortnight later, on April 13, the company announced that its wholly-owned subsidiary, Harvest Court Construction Sdn Bhd (HCC), had received a letter of intent (LOI) from KL Northgate Sdn Bhd for a RM1.22 billion project. This includes the construction of a car park, a five-storey mall, low-rise offices, two hotel towers and two residential towers.

While the LOI is not binding, the project is huge, considering Anzo’s revenue in the 12 months ended Dec 31 was only RM6.1 million while net losses amounted to RM9.7 million.

It is also interesting to note that a few weeks earlier, Anzo announced another LOI for a sizeable RM109.3 million project, also awarded to HCC. This LOI was received from Tinta Anggun Engineering Sdn Bhd for the proposed turnkey design, approval, building and delivery with certificate of completion and compliance of a 216-room hotel called Porto De Melaka Hotel and Resort.

Meanwhile, on March 31, Anzo managing director Chai Woon Chet acquired 600,000 shares or a 0.2% stake in the company at 52 sen apiece, lifting his total holding to 22.26%.

Against this backdrop, Anzo’s two company warrants are trading at a steep discount to the underlying share.

The first, Anzo-WA, closed at 23.5 sen last Thursday. With a conversion ratio of one for one and strike price of 25 sen, the warrant is at a 19.2% discount to the mother share. It expires in November 2019.

The second warrant, Anzo-WB, has the same strike price and closed at 24 sen last Thursday. This means it is trading at an 18.3% discount to the underlying share. It expires in August 2023.

While Anzo has been loss-making, it is relatively debt-free. It has only RM2.05 million in cash but no borrowings. However, the group does owe RM1.077 million (interest-free and unsecured) to a director.

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