KUALA LUMPUR (June 1): Shares in Hubline Bhd plunged as much as one sen or 50% after the group posted a net loss of RM369.33 million in the second quarter financial year 2015 (2QFY15).
Another reason, according to a dealer, was due to the loss-making logistic firm's proposal on rights issue and a private placement that are expected to raise about RM93.99 million.
He noted prior to the rights issue, Hubline planned to reduce the par value of its shares by cancelling 19 sen from the current 20 sen.
"The proposal did not augur well among investors," said the dealers, adding as they did not see a "clear prospects" in the company going forward.
"Even their major shareholders and directors were trimming down their stakeholdings when the share price stood at 4 sen or 5 sen. So how are they going to convince new investors to take up their new shares?" he questioned.
As at 11.18am, the stock was traded at its historical low of one sen. It was traded at a high of RM6.28 on March 31, 1997 before the 90s financial crisis.
Some 46.02 million shares done, translating into a market capitalisation of RM32.41 million. It was the most active counter across the exchange.
To recap, Hubline announced on Bursa Malaysia that it has proposed a rights issue and a private placement that are expected to raise about RM93.99 million.
Hubline said the gross proceed of RM93.99 million was based on the assumption of 1 sen per share for both the rights issue and private placement.
Hubline said 51% or RM48 million of the proceeds raised will be used to repay debt, while 46% or RM43.65 million will be used as working capital; the remaining 3% or RM2.34 million will be channelled to corporate exercise expenses.
Its total borrowings are expected to drop 21.3% to RM176.75 million, from RM224.7 million currently upon completion of the exercise.
In a separate filing, Hubline said its net loss in 2QFY15 has widened to RM369.33 million, from a net profit of RM2.01 million in 2QFY14, on a 51% plunge in revenue to RM44.996 million, from RM91.78 million previously.
For the cumulative six months ended March 31, 2015 (6MFY15), Hubline's net loss expanded to RM375.19 million, from a net profit of RM5 million 6MFY14, on a 41% slump in revenue to RM108.87 million, from RM184.45 million previously.
(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.)