Homeritz up 5.17% on bonus issue plan

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KUALA LUMPUR (May 6): Shares of Homeritz Corporation Bhd rose 5.17% at mid-morning today after the company proposed a bonus issue of up to 100 million new shares on the basis of one bonus share for every 2 existing shares held.

At 11.07am, Homeritz was up 5.71% or six sen to RM1.22 with 2.51 million shares done.

The company also proposed bonus issue of up to 50 million free warrants on the basis of one warrant for every 4 existing shares held. The bonus shares will not be entitled for the free warrants.

The proposals announced are expected to be completed by 3QFY15.

Hong Leong IB Research has maintained its “Buy” rating on Homeritz with a target price of RM1.54 and said it was neutral to slightly positive as larger share base would enhance the liquidity and marketability of the shares.

“We maintain our target price at RM1.54 (based on 10x P/E which is premium to the furniture industry average P/E of 8x as we forecast the Group’s CAGR growth at 14%). Maintain Buy.

“Post-bonus issue, our target price would be adjusted from RM1.54 to RM1.02 (vs. ex-price at RM0.77),” it said.