KUALA LUMPUR (July 8): Nitrile gloves maker Hartalega Holdings Bhd rose as much as 4.38% today, on yesterday (July 7)’s news of a proposed 1-for-1 bonus issue of 820.4 million new shares, on the basis of one bonus share for every existing share held by shareholders.

At 11:02am, Hartalega (fundamental: 2.6; valuation: 0.5) was up 28 sen or 3.23% at RM8.95, giving it a market capitalisation of RM7.11 billion. The counter saw some 250,400 shares done.

In a filing to Bursa yesterday, the gloves maker said the bonus issue was to raise its issued and paid-up share capital of the company to RM820.4 million, which will reflect its current scale and that of its subsidiaries.

“It also allows greater participation in the equity of the company in terms of the number of Hartalega shares held, whilst maintaining the equity interest. It would (also) improve trading liquidity of shares on Bursa Securities,” it said.

Meanwhile, Cheryl Tan, an analyst from AmResearch, said the implementation of the bonus issue would further enhance the group’s appeal.

“While a bonus issue would not have an impact on Hartalega’s valuations/fundamentals (i.e. not value accretive to shareholders), it should improve the stock’s trading liquidity,” Tan said in a note to clients today.

“As such, we expect further bounce to the group’s share price in the short term, on positive investor sentiment.”

Other than that, Tan said the rise in Hartalega’s price is also attributed to the sharp appreciation of the US dollar against the ringgit.

On July 6, the ringgit was reported to be trading at a 16-year low against the US dollar, causing export-oriented rubber gloves makers such as Hartalega and Top Glove to trade higher.

At 11:02am, Top Glove Corporation Bhd (fundamental: 2.5; valuation: 1.1) continued to rise 10 sen or 1.44% at RM7.05, giving it a market capitalisation or RM4.29 billion. The counter saw some 869,700 shares exchanged.

This came after Top Glove closed 26 sen higher yesterday at RM6.95 per share.

At the point of writing, the ringgit was trading at 3.8083 against the greenback.

(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.)