Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 7 ): TH Heavy Engineering Bhd erased gains after rising 1.5 sen or 1.85% to a high of 82.5 sen.

TH Heavy rose after it announced a proposed rights and bonus issue involving new shares in the company. The rights issue is expected to raise up to RM450 million for the firm

At 10.43am, the stock fell three sen or 3.7%  to 78sen.

TH Heavy's renounceable rights issue comes with a bonus issue on the basis of one bonus share for every five rights units.

Of the rights issue proceeds of RM450 million, RM274 million will be utilised for TH Heavy's capital expenditure (capex). The remainder will be used for other investments, and expenses in relation to the rights issue.

According to TH Heavy, RM180 million of the RM274 million capex allocation will be used  to finance the conversion of the floating production, storage and off-loading (FPSO) vessel to serve the contract secured from JX Nippon Oil& Gas Exploration Malaysia.

CIMB Investment Bank Bhd said in a note that the cash call (rights issue) could dilute CIMB's forecasted earnings per share for TH Heavy by 32%-36% and its target price (TP) for the stock by 46%.

CIMB, which raised its TP for TH Heavy shares to RM1.48 from RM1.23, however, maintained
its "add" rating for the stock.

“THHE offers long term earnings visibility, thanks to the FPSO business that landed an 8+10 US$372 million contract in May, and we understand that the company turned profitable in 3Q,” said CIMB.

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