KUALA LUMPUR: Poultry breeder DBE Gurney Resources Bhd and its warrants were the most active on Bursa Malaysia yesterday, fuelled by market speculation that shareholders of CI Holdings Bhd (CIH) could buy into the company.
Close to 139 million shares or about 20% of DBE changed hands, with the stock gaining two sen to 11 sen, while more than 60 million warrants were traded, nudging the derivatives up 1.5 sen to 6.5 sen. The 30-day average volume for DBE was 4.4 million shares. Off market, more than 14 million DBE shares changed hands, a chunk at eight sen a piece. The warrants with a strike price of 10 sen expire in March 22, 2016.
CIH managing director Datuk Johari Abdul Ghani, who controls 30% of the company, could not be reached for comment. Another substantial shareholder, Datin Mariam Prudence Yusof, who has a 20.05% stake in CIH, was not able to comment as she was boarding a flight. Mariam is a non-independent non-executive director of CIH.
Market chatter aside, DBE’s net profit for the first three quarters of FY11 has steadily improved from a RM2.28 million loss in 1QFY11 to 2QFY11 net profit of RM1.29 million and RM2.19 million in 3Q.
The group’s 3QFY11 net profit of RM2.19 million marks a slight improvement of 1.9% from RM2.15 million in the corresponding period in 2010.
However, cumulative net profit for the nine-month period ended Sept 30 was down by 70% at RM1.20 million, compared with RM4.09 million in the same period the previous year.
Looking back, DBE posted positive earnings for the first three quarters of 2010 as well, which led to a RM4.09 million profit as at Sept 30, 2010. However, 4QFY10 losses of RM4.29 million swung the group back into the red for a FY10 net loss of RM202,000.
Of more concern is the group’s cash situation. Since October 2010 the group has been raising funds to offset accumulated losses, which included reducing the par value of each ordinary share of 50 sen to 10 sen, a rights issue of 400 million new ordinary shares, and a reduction of RM6.97 million in the share premium account. Most of the influx of cash went to cover losses.
In 1QFY11, RM61 million was raised through issuing shares but the net cash position at the end of the period was RM17.6 million. As at Sept 30, 2011, the cash and cash equivalents of the group had dwindled to a mere RM3.26 million.
DBE’s net assets per share have also almost halved since 2010, falling from 21 sen per share to 11 sen per share as at end-September.
The poultry player’s poor performance comes against a backdrop of an industry that is turning around. From a macro perspective, the industry has an encouraging outlook given strong demand for its products, coupled with increasing prices and Malaysians being among the largest consumers of eggs in the world.
Furthermore, price controls have been relaxed to only five weeks of the year during festive periods, allowing producers to command better prices. The recent floods in Thailand have also disrupted supply and helped bolster prices. The group’s results for 4QFY11 ended Dec 31 will be an indicator of a recovery, or lack of it.
This article appeared in The Edge Financial Daily, January 19, 2012.
Close to 139 million shares or about 20% of DBE changed hands, with the stock gaining two sen to 11 sen, while more than 60 million warrants were traded, nudging the derivatives up 1.5 sen to 6.5 sen. The 30-day average volume for DBE was 4.4 million shares. Off market, more than 14 million DBE shares changed hands, a chunk at eight sen a piece. The warrants with a strike price of 10 sen expire in March 22, 2016.
CIH managing director Datuk Johari Abdul Ghani, who controls 30% of the company, could not be reached for comment. Another substantial shareholder, Datin Mariam Prudence Yusof, who has a 20.05% stake in CIH, was not able to comment as she was boarding a flight. Mariam is a non-independent non-executive director of CIH.
Market chatter aside, DBE’s net profit for the first three quarters of FY11 has steadily improved from a RM2.28 million loss in 1QFY11 to 2QFY11 net profit of RM1.29 million and RM2.19 million in 3Q.
The group’s 3QFY11 net profit of RM2.19 million marks a slight improvement of 1.9% from RM2.15 million in the corresponding period in 2010.
However, cumulative net profit for the nine-month period ended Sept 30 was down by 70% at RM1.20 million, compared with RM4.09 million in the same period the previous year.
Looking back, DBE posted positive earnings for the first three quarters of 2010 as well, which led to a RM4.09 million profit as at Sept 30, 2010. However, 4QFY10 losses of RM4.29 million swung the group back into the red for a FY10 net loss of RM202,000.
Of more concern is the group’s cash situation. Since October 2010 the group has been raising funds to offset accumulated losses, which included reducing the par value of each ordinary share of 50 sen to 10 sen, a rights issue of 400 million new ordinary shares, and a reduction of RM6.97 million in the share premium account. Most of the influx of cash went to cover losses.
In 1QFY11, RM61 million was raised through issuing shares but the net cash position at the end of the period was RM17.6 million. As at Sept 30, 2011, the cash and cash equivalents of the group had dwindled to a mere RM3.26 million.
DBE’s net assets per share have also almost halved since 2010, falling from 21 sen per share to 11 sen per share as at end-September.
The poultry player’s poor performance comes against a backdrop of an industry that is turning around. From a macro perspective, the industry has an encouraging outlook given strong demand for its products, coupled with increasing prices and Malaysians being among the largest consumers of eggs in the world.
Furthermore, price controls have been relaxed to only five weeks of the year during festive periods, allowing producers to command better prices. The recent floods in Thailand have also disrupted supply and helped bolster prices. The group’s results for 4QFY11 ended Dec 31 will be an indicator of a recovery, or lack of it.
This article appeared in The Edge Financial Daily, January 19, 2012.
