KUALA LUMPUR (Oct 4): Precision plastic injection moulding manufacturer Sanichi Technology Bhd (KL:SANICHI) has proposed to consolidate its shares on a 10-to-one basis.

The consolidation is aimed at reducing the volatility of Sanichi's share price, which has been trading at a low level, the group's bourse filing on Friday showed. A small fluctuation in the current share price can result in significant percentage changes, it noted.

Based on its closing price of two sen on Sept 9, the shares could theoretically adjust to 20 sen post-consolidation. Upon completion, the group's share base will decrease from 1.64 billion to 164.31 million shares, with a share capital of RM349.3 million.

Sanichi has also proposed a capital reduction of up to RM55 million from its issued share capital. This will be used to offset its accumulated losses of RM93.93 million at the group level as of June 30, 2024 (1QFY2024), reducing the outstanding losses to RM39.21 million.

In addition, Sanichi also seeks to reallocate RM75.74 million raised previously through a rights issue in 2021 for its short-lived glove venture following a surge in demand during the Covid-19 pandemic.

The funds were initially earmarked for acquiring a factory building and glove-dipping lines. Sanichi now plans to utilise RM29.18 million of these funds to partially repay its RM31.22 million in bank borrowings, which include a mix of overdrafts, hire purchases, and term loans.

Sanichi also plans to channel RM29 million into its first mixed-development property project in Melaka, Marina Point, which will feature a 17-floor serviced apartment with an estimated gross development value of RM265 million.

The remaining RM17.56 million will be used as working capital for its core plastic moulding business.

Sanichi expects the proposals to be completed by the first quarter of 2025, subject to all relevant approvals being obtained, with TA Securities as the principal adviser.

Shares in Sanichi closed unchanged at 1.5 sen on Friday, giving the company a market capitalisation of RM18.48 million. Year-to-date, the stock has fallen 50%.