Friday, March 23, 2012
JTiasa proposed a 2-for-1 Bonus Issue
JTiasa had just announced its results for QE31/1/2012. Its net profit increased by 11% q-o-q or 14% y-o-y to RM45.5 million while turnover was marginally lower at RM238 million. JTiasa benefited from lower effective tax rate due to no tax effect from the disposal of a subsidiary; thus boosting its profit after tax. It should be noted that its pre-tax profit actually declined by 13% q-o-q or 15% y-o-y to RM50.0 million.
Table: JTiasa's last 8 quarterly results
Chart 1: JTiasa's last 22 quarterly results
JTiasa (RM8.39 as at 11.00am) is now trading at a PE of 11.4 times (based on its last 4 quarters ' EPS of 73.82 sen). At this PE multiple, JTiasa is deemed fully valued.
Proposed Capital Exercise
JTiasa has proposed a private placement up to 15% of its share capital and a bonus issue of 2-for-1 thereafter. It has also fixed the ex-date for a dividend-in-specie of 1 Treasury share for every 20 shares owned. These capital exercise is driving up the share price currently.
From the monthly chart below, we can see that JTiasa has broken above its long-term downtrend line at RM5.00 in early 2011. It has just broken above its horizontal resistance at RM7.80. It may attempt the next resistance at the horizontal line at RM10.00.
Chart 2: JTiasa's monthly chart as at March 1, 2012 (Source: Tradesignum)
Based on generous capital exercise & positive technical outlook, JTiasa could be a good trading BUY. However, this will be a medium to high risk trade since the stock has rallied quite substantially over the past 3 years. For those who are holding this stock for investment purpose, I would recommend to take profit on this stock.