I saw the report from UBS on Bio-Treat technology. Market reacted negatively towards the right issue. As the big projects need more fund to support, they have turn to the market for capital.
The usual practises are such as fresh equity, corporate bond, convertible bond, right issue etc. Depends on what is the structure they want to take. Interestingly, market has its own view on these capital raising activities. Sometime, even fresh equity issue could pop up the share price (although existing share would be diluted), if a strong shareholder comes on board.
At the current valuation of 7.5x 2008 estimate PE, the stock is cheap. However, cheap stocks are plenty in the market right now. The share price could only move if they show some significant result and the risk appetite return.
Wednesday, 20 February 2008
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