KUALA LUMPUR (March 17): Hong Leong IB Research has downgraded WCT Holdings Bhd to “Sell” at RM1.55 with a lower target price of RM1.40 (from RM1.57) after the company proposes a rights issue (1 for 10) and free warrants (1 for 5 post rights issue).
In a note Tuesday, HLIB said the indicative rights price of RM1 implied 38% discount to last share price close.
“Proforma net gearing will reduce from 66% to 56%.
“Not positive on the proposal as the proceeds will be used for working capital rather than earnings accretion.
“Downgrade to Sell, strong risk of EPS dilution,” it said.