Thursday, August 15, 2013
FRB- a strong rally after a huge Right Issue!
Formis Resources Bhd ('FRB') is a loss-making company which had incurred a net loss of RM40 million for FYE31/3/2013 on a revenue of RM339 million. This is a deterioration from FYE31/3/2012 when it reported a net profit was RM11 million on a revenue of RM295 million.
In the past 4 years, FRB has completed a Bonus Issue of warrant (1-for-1), a distribution of a subsidiary shares (ISS) [again 1-for-1] and recently a Right Issue of 2 shares at RM0.50 each with 1 free warrant for every 2 shares owned.
The share price rallied strongly over the past 6 weeks from 45 sen to an intra-day high of 80 sen today. In view of the poor financial performance and the recent doubling of its outstanding shares, a gain of 70% over 6 weeks looks excessive unless there is an exciting project ahead. The share price may soon test the upper boundary of the irregular downward channel at about 85 sen.
Based on the above, I believe those holding the stock should consider taking profit on the shareholding.
Chart: FRB's weekly chart as at August 14, 2013-11.00am (Source: Quickcharts)
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, FRB.