SECOND-LINER Marco Holdings Bhd, previously illiquid and only remotely known to analysts, saw its shares surge 39 sen or 21.55% yesterday to RM2.20. The counter was one of the top gainers of the day on volume of 901,300 shares.
Market speculation has it that Marco, controlled by Tan Sri Robert Tan Hua Choon, will be given a new business direction following the proposed injection of Spanco Sdn Bhd into the company for an undisclosed value. The Tan family is the major stakeholder in Spanco.
The talk is that the deal will see Marco issuing new shares in exchange for the new business. However, a company official contacted by StarBiz said he was not aware of any such developments.
Spanco is a vehicle fleet management company involved in the leasing and maintenance of vehicles for civil servants. It has just re-negotiated a 25-year privatisation contract worth about RM80mil annually that will expire in 2019.
Marco's net profit for the financial year ended Dec 31, 2003 was RM1.5mil compared with RM902,758 in FY2002.
The Government is Spanco's only customer. The company maintains about 4,800 vehicles used by ministers and top civil servants.
An analyst with a local brokerage said the sudden price movement in Marco could be due to some aggressive buying by seasonal punters leveraging on the expected better earnings potential of the company once the deal is completed.
Marco is an investment holding company with subsidiaries engaged in import and export, the distribution of electronic calculators and timepieces, and property investment.
Marco director Thor Poh Seng, when contacted, said: “The company's recent move for a 1-to-10 stock split was aimed at better market participation and to enhance the counter's liquidity.”
The proposed stock split follows a rights issue with free warrants to meet the minimum paid-up capital requirement of RM60mil by Bursa Malaysia for main board counters.
The warrants are granted on the basis of two rights shares with three free warrants for every four existing Marco shares. The rights shares, which expired on May 13, were oversubscribed by 22.39%.
Upon full exercise of the warrants, at an exercise price of RM1, Marco's total share base will increase to 1.067 billion shares.
“The ex-date (for the proposed share split) will be determined after shareholders give their approval. An EGM has been called for Nov 9,” Thor said.
A technical analyst described the price surge as an upside volatility breakout of the 21-day Bollinger band, and also a price and volume breakout, signalling a major price movement was on the cards.
“Normally, this is a very promising indication,” the analyst said.
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