KUALA LUMPUR (Dec 18): Supermax Corp Bhd (KL:SUPERMX) is planning a bonus share issue on the basis of one share for every five existing shares held, along with the issuance of bonus warrants on the basis of one free warrant for every 20 existing shares held, to reward shareholders.

The proposed bonus issuances will involve up to 544.12 million new Supermax shares, and up to 163.24 million free warrants. The entitlement dates will be fixed and announced later, according to the group’s bourse filing on Wednesday.

On completion of the bonus share and warrants, and assuming full exercise of the warrants, Supermax’s issued share base — which stood at RM340.08 million, comprising 2.72 billion shares as of Dec 11 — will rise to 3.26 billion. 

Based on the five-day volume-weighted average market price (VWAP) of Supermax shares up to the latest practicable date of RM1.026, the theoretical ex-bonus share price is estimated to be 85.5 sen.

The warrants will be exercisable at any time within a five-year period from the date of issuance. Supermax has indicated an illustrative exercise price of RM1 each for the warrants, which could raise up to RM163.24 million for the company, to be used for working capital.

The proposals are expected to be completed within the first quarter of 2025, subject to obtaining all necessary approvals. UOB Kay Hian has been appointed as the advisor for the proposals.

Despite a 26% jump in revenue to RM224.65 million, Supermax’s net loss widened to RM64.6 million for the three months ended Sept 30, 2024 (1QFY2025), from RM2.05 million in the same quarter of the previous year, due to a 77% surge in operating expenses and unrealised foreign exchange losses amounting to RM45.6 million.

While it saw higher sales, Supermax said the company was fulfilling low-priced contracts, which would continue until the end of 2024. It also flagged challenges such as emerging competitors in Vietnam, and an acute labour shortage in Malaysia.

On Wednesday, Supermax’s share price surged as much as 8.18%, or nine sen to an intraday high of RM1.19, before easing a sen to trade at RM1.18 at the time of writing, giving the group a market capitalisation of RM3.21 billion. 

The stock has climbed 40% in the past three weeks, and has surpassed the 12-month average target price of analysts covering the stock of 95 sen, based on Bloomberg data.

Analyst sentiment towards Supermax is mixed. Three analysts have issued “buy” recommendations, while two have it on “neutral”, while one has rated the stock as “market perform”.