Stock With Momentum: Borneo Oil

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This article first appeared in The Edge Financial Daily, on October 19, 2015.

Borneo Oil Bhd (+ve)


SABAH-BASED Borneo Oil (Fundamental: 1.25/3, Valuation: 0.9/3) dropped 2.5% or 0.5 sen in heavy trade to close at 19.5 sen last Friday. This was the last trading day prior to the listing of the company’s renounceable rights on October 19. Since going ‘ex-rights’ on October 13, the stock has surged 30%.

To recap, Borneo Oil will be undertaking a 6-for-1 renounceable rights issue at 10 sen per rights share. Investors are also entitled to receive 1 free warrant for every 2 rights subscribed. The company expects to raise up to RM237.4 million from this fund raising exercise, of which 54.4% has been earmarked for its gold mining operations, which it diversified into last year. 

As of 1HFYJan2016, 60.5% of revenue and 55.1% of profit before tax came from this segment. The balance was derived from limestone mining and the company’s fast food operations, which consists of the popular East Malaysian “SugarBun” franchise.