Ibraco Bhd (-ve)

Shares of the usually illiquid Ibraco (Fundamental: 1.9/3, Valuation: 2.4/3) closed unchanged at RM2.18 yesterday as volume traded jumped four-folds to 71,000 shares.

The Sarawak-based construction and property developer will venture out of its home base. It is in the midst of acquiring a piece of prime land in Kuala Lumpur for RM55 million. The 5,825 square metres freehold vacant land, fronting onto Jalan Tun Razak and Jalan Yew, has been approved for mixed commercial development.

To fund the acquisition, Ibraco had on May 22 proposed a 2-for-5 renounceable rights issue, involving 50.65 million rights shares, at an issue price RM1 each.  Out of the expected proceeds of RM50.65 million, 59.2% will be used to repay borrowings, 38.6% to part finance the development costs of the said land, and 2.2% for rights issue expenses.

Ibraco’s gearing stands at 37.03%. The stock trades at a trailing 12-month P/E of of 7.0 times and 1.13 times book.

This article first appeared in The Edge Financial Daily, on July 8, 2015.