RHB optimistic of QL resources' outlook
RHB Research has maintained a buy call on QL Resources Bhd as it remains optimistic of its outlook given the company’s good track record, resilient business model and continued regional expansion.
QL has proposed a two-for ten rights issue at RM1.80 which is expected to raise gross proceeds of RM299.5 million and a 3-for-10 bonus issue of up to 249.6 million shares.
"We are positive on the proposals as the bonus issue will boost trading liquidity while the rights issue will reduce the group’s net gearing and we are not surprised by the proposals given that QL’s net gearing has been high and a fundraising is inevitable in the near-term," it said in a research note today.
The 3-for-10 bonus issue, which would enlarge its current share base to 1,081.6 million from 832 million shares, would be wholly-capitalised from the group’s share premium account, it said in a research note today.
As for the rights issue, RM220 million from the proceeds would be used to repay bank borrowings, RM70 million for capital expenditure and RM8 million for working capital, while the remaining RM1.2 million was for estimated expenses for the deal.-- Bernama