Date
|
Status
|
Price
|
Current Price
(RM)
|
Accumulate
Dividend (RM)
|
Gain / Loss
(%)
|
28/6/2015
|
BUY
|
1.81
|
1.70
|
0.00
|
-6.08%
|
11/12/15
|
SELL
|
1.70
|
2.31
|
0.00
|
+35.88%
|
On 7 January 2016,
FIAMMA prices shot up almost 26 % and continue to 13% the next day make a total
of almost 43% in the two day. The sudden spike of the price is most probably the
proposal of bonus issues.
Let us look into the
bonus issues announcement on 6 January 2016 and the annual report 2015 announce
on 29 January 2016 to check whether the sell called still maintain.
Announcement
on 6 January 2016
Let look into these
multiple proposal which cause the price of FIAMMA spike up. In the announcement
there are multiple proposal which going to be table for voting in the EGM on 23
February 2016 after the 33rd
AGM. Let look into the proposal one by one and what is the effect:
i)
Proposed share split (2:1 share split)
If this proposal is pass, FIAMMA share
will split from RM 1.00 to RM 0.50. These will cause more liquidation in FIAMMA
stock as the share outstanding double. The stock split will make FIAMMA price
cheaper and affordable to small investor.
Some investor will think the drop of the
share price after the stock split is a good time buy the stock and wait for it
to rise back to the price before split. However this will not the case, the
stock price drop to half after the stock split because the company is shares
between more people after stock split (double the number of outstanding share
1:2 stock split). In actual this does not increase the value of the FIAMMA
shares.
ii)
Proposed bonus issue (1 bonus share for
every 2 shares owned)
Bonus issue is another way a company can
gives back to their investor. If this proposal passes, the investor who has 100
shares in FIAMMA prior to the AGM will have 300 shares (100 shares from stock
split and 100 bonus shares).
This will cause the treasury share of
FIAMMA decrease and more share outstanding in the market. These will dilute the
earning per share.
iii)
Proposed ESOS (Employee Stock Options)
ESOS will only benefit to FIAMMA
employees and directors. If this proposal passes, option will distributed to
FIAMMA employees and directors.
They (employees and directors) are eligible to exercise
the option 20% per year up to 5 years if they exercised their option the stock
price will be dilute.
CONS:
|
|
Exercise
of 800,000 Warrants on 6 January 2016
This exercised of
800,000 warrants will dilute the shares outstanding. However some investor did
not realised these and push the shares price up after the proposal of bonus
issue which announce on the same day. The proposal had not approved yet if the
EGM vote no for the proposal there will not be any bonus issue.
CONS:
|
|
Annual
report 2015
From the annual report
2015, FIAMMA had a loan of RM 168,245,00.00 to be settle in one year time and
FIAMMA does not had enough cash to pay the debt base on the annual report.
The diluted earning per
share for 2015 increases from 27.34 sen to 36.75 sen. However there is RM 24,838,000
gain in fair value of investment properties which is just paper asset. If we
removed the RM 24,838,000 from 2015 earning, the diluted earning per shares is
20.61 sen which is lower that 2014.
2015 annual report
showed there is a negative operating cash flow which is not a good sign for a
company. The finished good in 2015 had increase compared to 2014 while the work
in progress good is reduced significantly in 2015. These might be a sign that
FIAMMA inventory is obsoleted.
CONS:
|
|