KUALA LUMPUR (Nov 2): Chin Hin Group Bhd’s share price dived as much as 7.76% or 17 sen to RM2.02 at morning trade on Tuesday, after announcing a 1-for-2 bonus issue of its shares the day before.

At 11.35am, the selling pressure remained on the stock as it was traded 16 sen or 7.31% lower at RM2.03, making it the fifth top loser in value terms on Bursa.

Public Invest Research analyst Ching Weng Jin said on Tuesday that the latest proposed bonus issue exercise is the second one this year as a means of rewarding its shareholders.

“We are neutral on this development, though we note share price has rocketed 62% in the last one month,” said Ching in a note.

“The sharp rise in share price leaves little upside to our revised target price of RM1.92 (RM1.35 previously),” he added.

Notwithstanding that, Ching said the research firm remains optimistic over the group’s prospects over the medium to longer term prospects, mainly premised on the expected rollout of construction/infrastructure-related projects in the coming year, in addition to the increased contributions from the listed entities it holds shares in, namely Solarvest Holdings Bhd, Signature Kitchen Bhd and Chin Hin Group Property Bhd (CHGP).

“We lift FY22/FY23 earnings estimates by an average 19% to account for better contributions from the listed entities in its stable of companies,” it said.

The research house is anticipating Chin Hin Group to generate annual net profit of RM68 million in the financial year ending Dec 31, 2022 (FY22) and RM74.9 million in FY23 on the back of revenue of RM1.40 billion and RM1.45 billion, respectively.

For FY21, the research house has projected the group to post an annual net profit of RM34.6 million on the back of revenue of RM983.4 million.

On Monday, Chin Hin Group proposed a bonus issue of one new share for every two held on an entitlement date to be determined later.

This marked its second bonus issue in less than a year since December last year. On Dec 28, 2020, the group announced the issuance of up to 278.19 million bonus shares on the basis of one bonus share for two shares held.

In a filing on Monday, the group said the maximum number of 500.75 million bonus shares was arrived assuming completion of a private placement of the remaining 116.42 million shares.

Based on the five-day daily volume weighted average price (VWAP) of Chin Hin Group shares and the lowest daily VWAP of its shares during the past three-month period up to Oct 29, the theoretical ex-bonus price for its shares is expected to be between RM1.31 and 86 sen.