KUALA LUMPUR (Aug 19): Xian Leng Holdings Bhd has proposed to reduce the par value of its shares by cancelling 80 sen out of the par value of every existing ordinary share of RM1 each.

In a statement to Bursa Malaysia today, Xian Leng said its issued and paid-up share capital as at Aug 17, 2015 was RM72.7 million, which comprises 72.7 million existing shares.

According to the Johor-based ornamental fish breeder, the proposed par value reduction would result in the reduction of its issued and paid-up share capital to RM14.54 million, comprising 72.7 million ordinary shares; from RM72.7 million comprising 72.7 million existing shares.  

It said the proposed par value reduction will give rise to a credit of RM58.16 million, which will be utilised to set-off against the accumulated losses of the company. The remaining balance will be credited to the firm's capital reserves.  

According to the filing, the accumulated losses for the group as at Jan 31, 2015 stood at RM25.51 million. It will realise a gain of RM9.67 million, after the proposed exercise.  

Post par-value-reduction, its capital reserve will also expand to RM22.99 million.  

Xian Leng said the proposed par value reduction will enable the company to rationalise its statement of financial position, by eliminating its accumulated losses.

"The reduced issued and paid-up share capital pursuant to the proposed par value reduction, would also better reflect the present financial position of the company and the group," it added.

It pointed out that by eliminating its accumulated losses, it will also enhance its credibility with bankers, customers and suppliers, as well as provide a better financial platform for the group's future growth.

The proposed par value reduction will not result in any adjustment to the share price of Xian Leng and the existing number of ordinary shares in issue, it said.

To facilitate the reduction in the par value of its shares, it has also proposed an amendment to its Memorandum and Articles of Association.

The proposals will be subject to the shareholders’ approval at an extraordinary general meeting to be convened.

Barring any unforeseen circumstances, Xian Leng targets the proposals to be completed by the fourth quarter of 2015.

Xian Leng (fundamental: 1.35; valuation: 0.9) closed four sen or 7.29% higher at 52 sen today, giving it a market capitalisation of RM37.25 million.

(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.)