FW: V.S. Industry (VSI MK; BUY; TP: MYR3.55) - Announce a 1-for-4 bonus issue

 

V.S. Industry (VSI MK; BUY; TP: MYR3.55) – Announce a 1-for-4 bonus issue

• Further improvement on liquidity. The 1-for-4 bonus issue announced by VSI yesterday is expected to lift share base by up to 52% based on a maximum scenario which assumes the full exercise of ESOS as well as Warrant-A, to c.1.99b shares. With VSI's recent market capitalization breaching the USD1b mark, we believe that this further improvement in liquidity could open VSI up to a new set of global investors. VSI remains our preferred pick in the EMS space, for its growth profile and exposure to global consumer electronic names.  Our MYR3.55 TP is based on 17.5x CY19 PER.
• Our forecasts are unchanged for now. The bonus issue, worth up to MYR80m in share capital value, will be distributed from its share premium account. The entitlement date has yet to be determined as the proposal is pending approvals from the relevant authorities and shareholders. This exercise is expected to complete by 2Q18.

The bonus issue has no impact on our earnings forecasts. Our EPS forecasts and target price are unchanged for now pending completion of the corporate exercise. However, the bonus issue would enhance VSI's shares trading liquidity and improve its perceived affordability.

 

 

 

 

 

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