ConnectCounty trades heavily on rights issue, acquisition, diversification proposals

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KUALA LUMPUR (April 2): ConnectCounty Holdings Bhd was actively traded on Bursa Malaysia today, after it announced a rights issue, an acquisition and business diversification proposals.

The proposed rights issue is to partly fund its proposed acquisition of electrical, mechanical and telecommunications contractor, Kejuruteraan Asastera Sdn Bhd (KASB).

ConnectCounty (fundamental: 0.95; valuation: 0.3) saw its shares dip to as low as 19.5 sen, down 1 sen or 4.88% from yesterday's close.

At 3.52pm, the counter was traded at 20 sen, down 0.5 sen or 2.44%, with 28.32 million shares having changed hands. It was one of the top actively-traded counters on the local bourse.

Alliance Investment Bank Bhd remisier Raymond Foo said the announcement of rights issue to fund its acquisition and its business diversification proposal was not “something exciting” to investors.  

“It is also normal for the investors to sell and take profit, as the share price has been on an upward trend for some time,” he added.

Connect County’s share price has been on an upward trend since early March. It closed at 15 sen on March 9. The stock closed at 20.5 sen yesterday.

Yesterday, ConnectCounty had proposed a rights issue of up to 800.9 million new irredeemable convertible preference shares (ICPS) to partly fund its proposed RM25 million acquisition of KASB.

Concurrently, the company also proposes to increase its authorised share capital to facilitate the issuance of the ICPS and new shares that will arise from the conversion of the ICPS.

The issuance of ICPS is expected to raise a minimum of RM16.5 million, of which RM12.5 million will be allotted to partly fund the proposed acquisition of KASB. The remaining proceeds will be used for working capital and capital expenditure.

In line with the acquisition, ConnectCounty is also proposing to diversify its business to include electrical, mechanical and telecommunication engineering contracting.

(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.)