KUALA LUMPUR: Former stock market favourite Sanichi Technology Bhd said it has successfully completed a renounceable rights issue.
The rights issue was oversubscribed by 26.84 per cent, and is seen as the final part of Sanichi's restructuring.
The restructuring includes a capital reduction and consolidation of its existing share capital, a restricted issue of 85,000,000 Sanichi shares to Protev Asia Ltd and a debt restructuring.
On paper, the exercise should help Sanichi come out of the GN 5 category, which is for companies with weak financial standing.
Questions, however, remain if Sanichi will be able to excite the stock market like how it did a year ago, as market sentiments have changed drastically. The local investors market now prefers blue-chip stocks rather than penny stocks.
A year ago, Sanichi was one of the most actively traded stocks as penny stocks dominated the most active list. The lowest the stock was traded last year was at four sen a share on December 19 2012, before hitting a high of 30 sen a share the very next day.
Sanichi shares closed 0.05 sen higher yesterday at 11.5 sen a share, a discount to its net tangible asset value of between 30 sen and 36 sen a share. Bernama reports:
Sanichi Technology Bhd, which has been mired in red ink, expects a return to the black in the current financial year ending June 31, 2013, following the completion of its corporate restructuring exercises.
The profit would be a result of debt waivers from creditors and an improvement in revenue and profit margins, it said in a statement.
For the first half ended December 31 2012, Sanichi posted a pre-tax loss of RM4.6 million on revenue of RM2.250 million, compared with a pre-tax loss of RM3.9 million on revenue of RM1.588 million in the corresponding period the previous year.
The net tangible asset value per share of Sanichi, immediately after the completion of its corporate restructuring exercise, is estimated at 16 sen.
The gearing of Sanichi is also reduced significantly and it intends to apply part of its rights proceeds to further reduce gearing.
The reduced gearing and improved liquidity will place the company on a strong platform to take on new and bigger projects, that it was unable to do so in the past, due to a lack of working capital and production constraints, the company said.
Sanichi said it recently secured several projects for the production of moulds for several makes of cars, including BMWs, Volkswagens and Nissan.
It expects to clinch further contracts from Mercedes and Scania in the coming months.
Over the past year, the Sanichi plant has been subjected to several inspections from different overseas technical teams to assess its quality standards and manufacturing capabilities, before the award of contracts.
Sanichi's factory in Thailand is also expected to show an improvement in revenue this financial year.
The factory focuses on the production of moulds for electronics and electrical appliances.
STB intends to upgrade its factory in Thailand by investing in new equipment and machinery to increase production capacity to meet the expected increase in business.
Sanichi believes its Thailand operations will grow in tandem with the growth of the Thai economy.