KUALA LUMPUR (Nov 16): Kumpulan Powernet Bhd’s (KPower) share price rose more than 6% in morning trade on Bursa Malaysia today after the diversified company announced last Friday its proposed split of one existing share into four units besides its planned issuance of up to 150.78 million free warrants.
At 9.10am today, KPower was 30 sen or 6.82% higher at RM4.70.
The stock saw 662,900 shares traded. At RM4.70, KPower had a market capitalisation of about RM531.48 million.
Last Friday, KPower said in a filing with Bursa that the share split aims to, among others, improve the trading liquidity of KPower shares and encourage greater participation by investors in the company’s shares.
Meanwhile, the free warrant issuance aims to, among others, strengthen the capital base of KPower with proceeds from the exercise of the warrants.
According to KPower’s website, the company’s diversified businesses include renewable energy operations, property development and textile manufacturing.
AmInvestment Bank Bhd analyst Jeremie Yap wrote in a note last Friday that after the ex-dates of KPower’s share split and free warrant issuance, AmInvestment’s fair value (FV) for KPower shares would be adjusted down to RM1.10.
"This is assuming full conversion of the warrants and the interest income [at 2% per annum] earned from the proceeds.
"[For now,] we maintain our 'buy' recommendation and forecasts, but increase our fair value by 22% to RM5.06/share (from RM4.16/share previously) for KPower based on 15 times CY21F EPS (earnings per share forecasted for calendar year 2021) from FY21F (the financial year ending June 30, 2021) previously,” Yap said.
He said that at KPower’s current valuation of about 13 times CY21 earnings, AmInvestment believes the home-grown renewable energy player has a compelling investment case given its involvement in the green sector where the growth trajectory is just beginning.