KUALA LUMPUR (July 14): Subscribers to Metronics Global Bhd’s RM77.97 million rights issue, at six sen per share, appear to have an unusual opportunity to make attractive profit from the free warrants that came with their subscriptions.

Metronics Warrant-B rose sharply upon being listed on Bursa Malaysia on Wednesday (July 13), opening at three sen apiece and closing at 11.5 sen.

The warrants jumped further to an intraday high of 39.5 sen on Thursday, before paring gains to settle at 21.5 sen.

This compares to Metronic’s closing share price of nine sen, up two sen or 28.6% on Thursday. It was the most actively traded counter on Bursa Malaysia, while the Warrant-B was the third most actively traded counter.

The group’s Warrant-B can be converted to new shares at an exercise price of six sen.

An investor who owned 100 shares in Metronics before the rights issue would have been entitled to subscribe to 600 rights shares and 200 free warrants for RM36 or six sen per rights share.  

If the 200 warrants were divested at 21.5 sen each or RM43 on Thursday, the investor would have made a profit of RM7, or a 19% gain from each warrant sold.

Metronic’s rights issue, which was 99.88% subscribed, was part of a series of corporate exercises proposed in November last year. It also involved a 10-into-one share consolidation, shrinking the group’s share base to 216.86 million on May 23 from 2.17 billion as of Nov 5 last year.

According to Bloomberg data, Metronic’s shares fell 47% to eight sen on May 23 when it completed the share consolidation, from 15 sen on Nov 19 last year when it proposed to undertake the corporate exercises.

Metronic proposed to raise between RM10 million and RM121.97 million with chief executive director Hoo Wai Keong and non-executive director Datuk Kua Khai Shyuan’s undertaking to subscribe in full to their entitlements. Hoo owned a 0.05% stake in Metronic before the rights issue while Kua owned 0.02%.

The group, which is involved in the provision of hardware and software required for buildings' control and management, also proposed to diversify into the solar energy business.

It is worth noting that these proposals came less than two months after Metronic completed an RM22.71 million private placement in September last year, via the issuance of 500.43 million new shares, equivalent to 30% of its share base before the placement.

Subsequent to the rights issue, several parties emerged as the group’s substantial shareholders, including Cita Realiti Sdn Bhd, which subscribed to 287.8 million rights shares giving it an 18.979% stake; Sanichi Technology Bhd with a 13.068% stake or 193.67 million rights shares; BCM Alliance Bhd (through BC Medicare Sdn Bhd) with a 6.66% stake or 101 million rights shares; and Bumi Resources Hub (M) Sdn Bhd with a 5.56% stake  or 84.33 million rights shares.

Metronic's non-executive director Kua is the single-largest shareholder in Sanichi as at end-March this year with a 6% stake, followed by Cita Realiti’s 4% shareholding. BCM Alliance also owns a 1.8% interest in Sanichi according to the latter’s annual report for fiscal year ended Dec 31, 2021.

BCM Alliance’s annual report also shows that Sanichi was its third largest shareholder with a 6.1% stake

On Thursday, Metronic disclosed that another Bursa-listed company Fitters Diversified Bhd, through Fitters Property Development Sdn Bhd, has also subscribed to 201 million rights shares, giving it a 13.26% stake.

Cita Realiti ceased to be a substantial shareholder of Fitters on May 13 following a divestment of 25.29 million shares in the open market, shortly after emerging as substantial shareholder on March 21 with a 10% shareholding or 49.95 million shares via the subscription to 47 million private placement shares.

Sanichi’s group managing director Datuk Seri Pang Chow Huat, meanwhile, also owns a 7.9% stake in Fitters Diversified as on May 31.