Uzma Bhd - 1 for 2 Bonus Issue

News   Uzma Bhd (“UZMA”) has proposed to undertake a bonus issue of 44.0m new ordinary shares of RM0.50 each, on the basis of 1 Bonus Share for every 2 existing Uzma Shares held.

The entitlement date will be determined and announced later.

Comments  We understand that the purpose of this corporate exercise is to 1) reward shareholders and 2) improve the stock’s liquidity.

After the bonus issue, the company’s share base will increase by 50% to 132.0m from the existing 88.0m shares. 

The bonus issue will have no impact on our valuation for the stock. However, with the increased number of shares, this has resulted in our FY12E EPS and DPS being adjusted downward by 33.3% simultaneously. FY12E EPS will be diluted to 16.91 sen from 25.4 sen while FY12E DPS will be diluted to 0.33 sen (from 0.50 sen previously). 

Outlook  We remain positive on the company. Its upcoming 1QFY12 result is expected to be better than the previous quarter.

In addition, a strong 2H12 is also expected as two more UzmAPRES (6^th  and 7^th  unit) are set to be deployed in 1-2 months time.

Forecast  At this juncture, we are maintaining our FY12E net earnings at RM22.3m. We will introduce our FY13-14E forecasts in our forthcoming results report. 

Rating  MAINTAIN OUTPERFORM

Valuation   Our cum-bonus target price remains at RM2.20/share, based on 8.6x PER of its FY12E earnings, offering a capital upside of 12.2%. 

Post bonus issue, our ex-target price would be adjusted to RM1.47/share against the ex-share price of RM1.31.  

Risks  Any unforeseen delays in UzmAPRES deployments. 

Source: Kenanga