THE BUZZ
Yesterday, Century Software (CSHB) proposed a bonus issue of
43m 5 year warrants in CSHB on the basis of 1 free warrant for every 8 existing
shares.
OUR TAKE
Still having potential upside of 19.2% after dilution
impact. Based on an indicative exercise price of RM0.50, the warrant is
currently out-of-the-money. Nonetheless,
assuming that the warrants are fully converted into mother shares in the future,
our fair value (FV) would be adjusted to RM0.51, after taking into
consideration the RM21.5m cash proceeds
to be offset against CSHB’s pre-existing debt obligations. Even with the full
dilution impact to our EPS, our back-of-the-envelope FV of RM0.51 is still
above the current market price of RM0.425, providing a handsome potential
return of 19.2%.
Source: OSK188
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