KUALA LUMPUR (Aug 7): Wood-based furniture maker Poh Huat Resources Holdings Bhd today proposed a one-for-two share split exercise, and a bonus issue of warrants thereafter — the first to improve its shares liquidity and the second to potentially raise funds for its working capital.

In a filing with Bursa Malaysia today, the group said the share split involves the subdivision of every one existing share of RM1 each into two shares of 50 sen each held on an entitlement date to be determined later.

Poh Huat expects the adjustment in the market price of its shares will make it more affordable and appeal to a wider group of shareholders and investors.

As at July 30, the issued and paid up share capital of Poh Huat is RM113.39 million, comprising 113.39 ordinary shares of RM1 each.

On completion of the proposed share split, its enlarged issued and paid-up share capital will be RM113.38 million comprising 226.77 million shares.

Subsequent to the share split exercise, the group will undertake a bonus issue of up to 56.69 million new warrants on the basis of one free warrant for every four existing Poh Huat shares.

The group’s board of director has fixed the exercise price of the warrants at RM1, with five-year tenure. The entitlement date of the bonus issue will be the same as the proposed share split.

Other than rewarding shareholders, Poh Huat said the free warrants would help to strengthen its capital base and shareholders’ fund as well as potentially provide funds for it to finance working capital requirements as and when the warrants are exercised.

“The proposed bonus issue of warrants is not expected to raise any funds as the warrants will be issued for free to the entitled shareholders of Poh Huat. However, as and when the warrants are exercised, the exact quantum of proceeds that may be raised by Poh Huat will depend upon the actual number of warrants exercised during the tenure of the warrants,” it said.

As illustration, proceeds of up to RM56.69 million may be raised assuming the full exercise of up to 56,693,552 warrants at the exercise price of RM1, it added.

As at market break, Poh Huat (fundamental: 2.1; valuation: 2.4)’s stock was trading at RM2.75; the counter has been steadily climbing over the past one year and has more than doubled from the RM1.36 seen on Aug 8 last year.

(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.)