KUALA LUMPUR (Dec 11): Shares of integrated logistics provider Harbour-Link Group Bhd climbed 2.36% on multiple proposals featuring a share split, a bonus issue and warrants it plans to execute in the second quarter of 2016 pending approvals.

At 10.40am, Harbour-Link rose seven sen to RM3.03 with 383,200 shares done for a market capitalisation of RM537.8 million.

Yesterday, Harbour-Link announced that it proposed a share split involving the subdivision of every one existing ordinary share of RM1 in the company into two new ordinary shares of 50 sen each.

It also proposed a bonus issue of up to 36.4 million new subdivided shares to be credited as fully paid-up on the basis of one bonus share for every 10 subdivided shares held by entitled shareholders on the entitlement date after the completion of the proposed share split.

In addition to that, Harbour-Link proposed a bonus issue of up to 36.4 million warrants in Harbour-Link on the basis of one warrant for every 10 subdivided shares.

An amendment to the memorandum and articles of association of Harbour-Link is proposed to facilitate the implementation of the proposed share split whereby the authorised share capital of RM500 million comprising 500 million ordinary shares of RM1 each will be amended to RM500 million comprising one billion ordinary shares of 50 sen each.

The rationale for the proposed share split will not have any direct impact on the market capitalisation of the company but would result in an adjustment to the market price of the ordinary shares of Harbour-Link.

"(This would) make the shares more affordable to appeal to a wider group of public shareholders and/or investors to participate in the growth of the company.

"Furthermore, it is expected to improve the trading liquidity of Harbour-Link shares on the Main Market of Bursa Securities by increasing the number of shares in issue," it said.

The proposed bonus issue of shares aims to reward the existing shareholders for their loyalty and continued support by enabling them to have a greater participation in the company's equity.

"The proposed bonus issue of warrants seeks to reward and provide the entitled shareholders with an option to further increase their equity participation in the company at a pre-determined exercise price during the tenure of the warrants and to benefit from the future growth and any potential capital appreciation arising therefrom.

"Further, it may potentially provide additional working capital to the company as and when the warrants are exercised.

"The quantum of proceeds that may be raised by Harbour-Link from the exercise of the warrants in the future would depend upon the actual number of warrants exercised during the tenure of the warrants as well as its exercise price which will be determined at a later date.

"Such proceeds will be utilised for the working capital requirements of the Harbour-Link group," it said.

The proposals are not expected to have any material effect on the earnings of Harbour-Link Group for the financial year ending June 30, 2016, but there will be corresponding dilution in the earnings per share (EPS) of the group due to the rise in shares.

"Notwithstanding the aforesaid potential dilution in EPS, the exercise of the warrants may contribute positively to the group's earnings through the utilisation of proceeds arising from the exercise of the warrants," it said.

The proposals are conditional upon approvals from Bursa Sercurities Sdn Bhd, Harbour-Link's shareholders and other relevant parties.

Barring any unforeseen circumstances and subject to all required approvals being obtained from the relevant authorities and/or parties, the board expects the proposals to be completed by the second quarter of 2016.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)