KUALA LUMPUR (Nov 5): HIL Industries Bhd, a manufacturer of injection moulding products, rose 0.5 sen or 0.65% after Edge Research said the stock had privatisation potential.
HIL rose to 77.5 sen at 10.47am after rising to an intraday high of 78.5 sen earlier.
The FBM KLCI fell 7.08 points or 0.4% to 1,840.28.
According to Edge Research, HIL is a prime target for privatisation because of the low free float in HIL's share base and the company's large cash holding.
“The company has a net cash of RM101.7 million as at June 30, 2014 or 36.8 sen per share – half the current stock price,” said Edge Research.
HIL's two largest shareholders Dalta industries Sdn Bhd and Datuk Ng Boon Thong hold a combined 65.9% stake in HIL.
Edge Research said if both shareholders choosed to privatise HIL, it would only cost them RM69.8 million to acquire HIL shares which they did not own.
"Interestingly, if Dalta and Ng opts to privatise the company, it will cost them nothing. At current prices, it would only cost RM69.8 million to acquire the remaining shares they
do not own, which can be recouped from the company’s cash on hand.
"Notably, an attempt was made to privatise HIL previously in 2006," Edge Research said.
Edge Research's report is published in The Edge Financial Daily today. HIL is also featured as one of the stocks with momentum in TheEdge Markets.com.