KUALA LUMPUR (April 7): Kelington Group Bhd emerged as the top gainer on the local bourse this morning after proposing a one-for-one bonus issue of up to 322.62 million new shares.
The counter rose as much as 24 sen or 11.37% to RM2.35 in early trade. At 10.31am, it had pared some gains at RM2.27, still up 16 sen or 7.58%, with 6.03 million shares changing hands.
Upon the completion of the bonus issue, the group also plans to issue 215.08 million free warrants on the basis of one warrant for every three shares held.
The group, which provides ultra-high purity gas delivery solutions to the electronics and semiconductor industries, also revealed its plans to venture into manufacturing, distribution and trading of industrial and specialty gases.
Affin Hwang Capital analyst Tan Jianyuan said in a note today he reiterated "buy" on the stock, with an unchanged 12-month target price (TP) of RM2.30.
He said he views the warrant exercise positively as the group is planning ahead to build up its war chest to expand more aggressively into the industrial gas business via asset acquisition, which is expected to raise the overall group profit margin and provide a steady recurring income stream.
“While [industrial gases] only made up 6% of its 2020 revenue and 3% of its profit before tax contribution, management believes that the contribution may be at least 25% of group net profit moving forward. We make no changes to our earnings forecasts,” said Tan.