KUALA LUMPUR: KPJ Healthcare Group Bhd’s share price hit an intra-day high of RM4.30 – its highest in almost 12 years – on positive reactions to the company’s plan to split its shares and proposed bonus issue. KPJ ended the day 8 sen, or 1.93% higher at RM4.22 on a moderate volume.
On Thursday, the hospital operator proposed a one-into-two share-split exercise, followed by a bonus issue of one free share for every four shares held after the split, and an issue of up to 131.91 million free warrants on the basis of one warrant for every share held.
“The proposed share split and bonus issue are expected to improve the liquidity and marketability of the shares,” KPJ said. The company expects to complete the proposals by the first quarter of next year.
As at Sept 30, KPJ’s paid-up capital stood at RM211.05mil. Analysts contacted were hardly surprised by KPJ’s share price movement.
An analyst said although KPJ had yet to announce the date to qualify for the share split and bonus issue, investors were already picking up the shares.
He added that the share split would increase the liquidity of the stock and make it more attractive to smaller investors.
OSK Investment Research maintained a “buy” on KPJ with an upgraded target price of RM4.98 from RM4.39 previously, after rolling its earnings per share (EPS) from financial year ending Dec 31 (FY09) to FY10 at 10 times price-to-earnings ratio (PER).
The research house said despite the recent share price appreciation, KPJ was still trading significantly below its regional peers, which were trading at around 15 times to 25 times PER.
“We maintain our view that KPJ is an excellent choice for portfolio balancing as well as a long term investment given its relatively defensive business and steady dividend payout,” it said.
Nevertheless, the effectiveness of the proposals in improving liquidity in KPJ shares would be dependent on the shares’ free float, which was in turn determined by the stake held by its major shareholders, it added.
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