SUNZEN BIOTECH CORP, an ACE Market-listed company which develops, manufactures and markets animal healthcare products, saw its share price reach an all-time high of 45 sen last Thursday. Year to date, the stock has risen 58.82%.

The stock appeared to have garnered some interest during the week as trading volumes were higher than usual. Last Thursday, over 2.2 million Sunzen Biotech shares changed hands.

Similarly, trading of Sunzen Biotech-CW was revived after a long lull. The warrant’s trading volume started picking up on June 4 and has been actively trading since. Last Thursday, it closed at 34 sen after 275,000 warrants crossed.

Based on the closing price of 34 sen, the warrant is trading at a 2.2% discount to the mother share at its exercise price of 10 sen. It is also worthwhile to note that just two months ago, the warrant was trading at a 47% premium.

Sunzen Biotech-CW is an American call warrant that can be exercised anytime up to its expiry date of April 14, 2019. While it is not trading at a substantial discount to the mother share, it does offer slight leverage for investors who are interested in the mother share.

Sunzen Biotech (fundamental: 0.9; valuation: 0.2) has gone through a series of corporate exercises, starting in April this year. On April 27, the company announced that it completed a private placement of 14.88 million placement shares. They were placed at 36 sen apiece. Proceeds of the private placement were used to upgrade and purchase plant and machinery.

Then on May 6, the company completed a bonus issue exercise on the basis of one bonus share for every two existing Sunzen Biotech shares. Over 95.2 million bonus shares and 11.73 million adjusted warrants were issued and listed on the Ace Market.

In its last quarterly earnings report for the period ended March 31, 2015, Sunzen Biotech recorded a 23.88% decrease in revenue compared with the preceding quarter. The company said this was due to shorter trading period during the year’s first quarter. Profit before tax also fell by 30.54% compared with the preceding quarter, due to lower sales volume.

Currently, Sunzen Biotech’s largest shareholder with a 27.86% stake is Hau Hong Choon, who is also the CEO. He is followed by chief operating officer Chai Lim Eng, who has a 4.2% stake.

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. Visit www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in Capital, The Edge Malaysia Weekly, on June 15 - 21, 2015.

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