My Portfolio May22

 

Summary of May 2022

Stock Portfolio @ End of May22

Since reaching its height in Feb22, my stock portfolio value has been gradually shrinking non-stop like a leaking pipe.

May is the worst month to my portfolio so far this year with a loss of 4.2%. The main culprit is the 17% decline of Maybulk while most tech-related stocks also suffered in this month.

Year-to-date loss stands at 9% but it's still better than year 2016 & 2018 which suffered loss of 14.7% and 13.5% respectively at this stage.

There seems to be nothing special happening in May, just the old stories of inflation, US rate hike and Russia-Ukraine war. 

Brent oil price continues its uptrend and it touched USD124/bbl in the last day of May.

From the financial performance of local listed companies, I feel that most of them do not do very well.

For those companies in my portfolio, I think the latest quarterly results of Uchitec, MFCB, Rhonema, JHM, Master and LEESK are good. 

The rest are so-so.

My Portfolio Feb22

 

Summary For February 2022

Portfolio @ End of Feb22

In Feb22, KLCI registered a superb monthly gain of 6.35%, mainly due to the gain of blue chips plantation and banking stocks.

Technology related stocks continue to suffer as there seems to be a second round of sell-off. 

My portfolio has quite a number of tech-related stocks but it has been "saved" by Hibiscus again. Overall it's a flat month to me.

The hottest headlines recently is undoubtedly the invasion of Ukraine by Russia. It has resulted in the spike in certain commodities price such as crude oil, crude palm oil, soybean and aluminum etc.

When the US warned the world of the potential invasion of Ukraine by Russia earlier in February, I think not many people believed that it will ever happen.

We are living in a modern "civilized" world now. Even though there are still lots military conflicts around the globe, an "unprovoked" invasion of a sovereign country by a super power is almost unheard of.

Perhaps Ukraine or certain country has done something that provoked Russia but such brutal action of destruction to properties and life is definitely not right.

My Portfolio Sep21

 

Summary For September 2021

My Portfolio @ End of Sep21

The performance of the stocks in my portfolio in September is mixed, with nine gains and nine losses.

Overall my portfolio lost 1.2% in this month.

The worst performer is Supermax which suffered a 27.5% drop. I didn't follow its share price closely and was actually quite shocked to realize how low it has gone.

Nevertheless Supermax has a 15-sen dividend ex-ed in Sep21.

Even though I don't have a lot of Supermax shares, it's still a disappointment to me. 

On the other hand, the best performer is DKSH which gains 19% but I also do not own a lot of its shares.

My Portfolio May21

Summary For May 2021

Portfolio @ End of May21

Due to the slump in SCIB share price, my portfolio suffers its heaviest loss in one month at -19% since losing 21.7% in Mac20. 

SCIB was my major holding and made up ~40% of my portfolio. It has contributed massively to my portfolio gain this year but now I have to vomit out those gain.

The big news in the stock market in May should be none other than Serba Dinamik's audit issue.

Serbadk first announced its intention to appoint an independent firm to commence a special independent review on its accounting matters raised by external auditor KPMG on 25th May 2021.

It's then followed by a public holiday, 2 days of trading suspension and 2 days of weekend. 

When trading resumed on the 31 May, its share price straight away limited down.

My Portfolio Mac21

Summary for March 2021

Portfolio @ End of Mac21

In general, March 2021 is not a good month in stock market. My portfolio lost 7.1%, mainly due to the decline of my major holdings SCIB & Jaks.

Taking some profit from SCIB earlier in the month helps to reduce the percentage of loss.

I still hold quite a lot of SCIB shares. I believe the company can continue to grow in 2021 and hope that it can achieve its RM2bil market cap target by the end of this year.

Jaks just released a bad quarter result with a shocking RM103mil loss after tax and minority interest in its FY20Q4. Its loss before tax for the quarter is RM183.5mil.

However, there are reversal of disposal gain (RM85.3mil), impairment loss of goodwill (RM52mil) & receivables (RM23.6mil), share grant plan expenses (RM17.1mil) and loss on disposal of investment properties (RM5mil) in this quarter alone.

After deducting all those bigger items above, its actual loss before tax is just RM0.5mil in the quarter which is not too bad.

Important Dates of Corporate Exercises

When investing in stock market, inevitably we will come across dividends, bonus issue, rights issue etc.

Companies will announce such exercises through Bursa announcement and it usually contains a few dates. These dates can be confusing especially for beginners.

Lets study these dates with real examples.

JAKS: The Beginning of A New Chapter

After a few changes, Jaks has finally fixed the entitlement basis of its rights issues with warrants.

Before this on 9th September 2020, Jaks released a circular to shareholders in relation to its rights issue and it seems like the management revised it again.

The "illustrative" rights share and warrant entitlement has changed to 3 rights shares for 1 ordinary share held, together with one "free" warrant for every 2 rights shares subscribed. 

The illustrative issue price for each rights share has been reduced further to 12sen from 22.5sen.

Such plan will see a substantial increase in Jaks outstanding shares from 0.65 billion up to 3.2 billion before the new warrant conversion, and 4.4 billion after full warrant conversion!

JAKS Wants More Cash

When I saw Jaks's Bursa announcement on rights issue on 13/7/20, I thought that it has finally fixed the price and date for its rights issue.

To my surprise, Jaks revised its original proposed rights issue in order to raise more money, from min/max RM130mil/RM160.9mil to RM200mil/RM289.6mil.

Most shareholders expect Jaks to be cash rich in a couple of years time, so they might be "shocked" by this increase in cash call.

For me, I actually don't feel particularly disappointed. I just think that Jaks needs the extra money to do something, be it to expand its business, pay the debts or compensation whatever.

Compared to private placement and huge bank borrowings, rights issue with "free" warrants might be a better way. However, I'm not too comfortable with the large amount of warrants.

I believe that the money raised will be put into good use. It will be superb if it is to subscribe to the remaining 10% of the power plant sooner to make it 40%.

I don't know the directors and I'm not sure whether they are credible, cunning or selfish. Perhaps I'm too naive. 

The original plan is 4 existing shares entitled to 2 rights shares (est 40sen) with 1 warrant.

The revised plan is 5 existing shares entitled to 8 rights shares (est 22.5sen) with 4 warrants (ex 50sen).

If you have 1,000 Jaks shares now, you are entitled to 1000 x 8/5 = 1600 rights shares and 800 warrants. You need to pay 1600 x 0.225 = RM360 to subscribe in full.

The new TERP is RM0.50 based on 5-day VWAMP of RM0.9443. So the illustrative rights share price of 22.5sen represents 55% discount to TERP which is almost similar to the original plan (53%).

A total of 888.8mil issued rights shares stated in the table above is based on minimum RM200mil. If all rights shares are fully subscribed from existing 651mil ordinary shares, the number of rights shares will be 1,041mil in which RM234mil can be raised. So the total shares will reach 1,692mil before conversion of warrants. 

The table below shows Jaks original rights issue proposal for comparison purpose.

As mentioned in previous post "Jaks Worth Only 40sen?", even though the number of shares increase substantially and EPS will be adjusted lower, there will be no dilution to existing shareholders who subscribe to the rights issue fully.

If Jaks is able to generate the anticipated RM200mil annual net profit (from 30% shares), its projected EPS will be 11.8sen base on total shares of 1,692mil. Refer "Jaks: Cash Cow In The Making?" for estimated profit and cash flow from its Hai Duong power plant.

Following the rights issue, Jaks share price will be adjusted lower accordingly. If its share price stands at 88sen on the ex-date, it should be adjusted to around 48sen if I'm not wrong.

This calculation is based on "before = after", p = adjusted share price.

(0.88 x 5) + (8 x 0.225) = (5+8)p + 4(p - 0.50)

p = 0.48

Base on projected EPS of 11.8sen, if fair PE ratio is 10x, target price will be RM1.18. This represents a potential 150% upside from 48sen.

When Jaks achieve 40% shares in the power plant, then potential annual net profit could be RM260mil with a projected EPS of 15.4sen. This is a potential 220% upside from 48sen if PE of 10x is given.

At 30% shares, a potential cash inflow of approximately RM300mil per year into Jaks is expected from the power plant operation. If the management is to give out one third or RM100mil to Jaks shareholders as dividend, it will be 5.9sen per share. This is a 50% payout from its net profit of RM200mil and a 12% dividend yield from share price of 48sen!

If Jaks choose to distribute only 20% cash from its power plant as dividend which is RM60mil, it will be a dividend payout of 30% from its net profit. Dividend per share will be 3.5sen per and dividend yield is 7.4% from 48sen.

If the dividend yield is consistently high, then the market might give Jaks a PE higher than 10x.

How much will Jaks distribute if its shares in the power plant rise to 40%? At this level, potential free cash flow attributable to Jaks might reach RM400mil annually.

Nevertheless, these calculations do not factor in the conversion of warrants in the future.

At this time the power plant in Vietnam has already fired up according to plan and the bleeding Pacific Star project should be able to be completed in 2020. Investors have to wait for year 2021 when both units of power plant run at full steam.

However, there are risks as well, such as:

- further delay or failure of the power plants operation

- net profit & cash flow contribution from power plant turn out to be way lower than expected

- management of Jaks refuse to pay reasonable dividends 

- management of Jaks burn the cash with bad investment

Once the power plants are up and running in full throttle, not even a 10th wave of Covid or further global recession or stock market rout can prevent Jaks from making consistent profit and receiving fantastic cash flow for 25 years.

Please note that this is not a buy/sell call on Jaks. I can't guarantee all the calculations and information here are correct and accurate. Invest at own risk!

My Portfolio Jun20

Summary For June 2020

Jun-20
Numbers of stocks	14
Share Sold	Notion @ 0.705 (all)
Share Bought	JAKS @ 0.88
	JHM @ 1.33
	SCIB @ 2.06 (add)
Overall 2020
Portfolio Return Jun20	2.83%
KLCI Return Jun20	1.88%
Portfolio Return YTD20	-0.50%
KLCI Return YTD20	-5.53%

Portfolio @ End of June 2020

Stocks	Avg	May20	Jun20	Div20	Jun20%	Overall%
BJAUTO	1.92	1.25	1.48	4.2	18.4	-22.9
DAYA	0.035	0.005	0.010		100.0	-71.4
DKSH	2.50	2.83	2.49		-12.0	-0.4
GESHEN	0.43	0.44	0.43		-2.3	0.0
HIBISCUS	1.05	0.56	0.62		10.7	-41.4
JAKS	0.88		0.86			-2.3
JHM	1.33		1.34			0.8
KPOWER	2.03	1.98	2.30		16.2	13.6
KRONO	0.76	0.52	0.535		2.9	-29.6
LEONFB	0.505	0.315	0.310		-1.6	-38.6
MATRIX	1.42	1.70	1.81	6.00	6.5	27.5
PRLEXUS	1.15	0.65	0.54		-16.9	-53.0
SCIB	2.06	2.03	2.13		4.9	3.4
SCIENTEX	2.735	8.28	8.90		7.5	225.4

For June 2020 my portfolio achieved a modest gain of 2.8%. Year-to-date it's close to break even.

On 29th May, I bought  my first stock since February this year. I'd say it's quite late and there are a lot of opportunities missed.

My first purchase was KPower followed by SCIB on the same day. In early June, I increased my position in SCIB and added Jaks into my portfolio. Only in late June I decided to add JHM.

My confidence in current stock market was actually not that high, so I was thinking of whether I should invest short term "hit & run" style or mid to long term like I used to do.

I decided to choose the latter.

As mentioned in my previous articles about Jaks, I believe that Jaks's FY21 will be great. However, as this stock has bad "Qi" from its history, it might not go up to where everybody wants it to be in a short period of time.

Jaks, together with Datuk Abdul Karim's KPower & SCIB are all companies in construction sector, a sector which is not in positive trend like health-related and technology stocks. 

Nevertheless, they are not in negative trend either. It's just neutral. Upcoming 12th Malaysia Plan (2021-2025), along with Sarawak state election and possible snap GE15 might act as catalyst for construction sector.

There are many tech stocks that I wish to invest in, including MI, SAM, Frontken, JHM & Gtronic. Finally I selected JHM mainly because I feel that its business model and products have the potential to generate good growth going forward, even though its share price has already went up more than 10 times before.

5G and electric vehicles are the next big things. I read that JHM plays some parts in 5G modules and EV charging stations which attracts my attention. 

However, its automotive-related LED back light business might suffer in Q2. Hopefully it can get back on track after that. 

I have sold all Notion shares to lock in the profit after holding it for more than 4 years. While its FY20Q1 loss-making result was not a surprise to me, I was a bit disappointed that the management did not mention much about its "Stingray" & "Nixon" projects.

I still have plan to buy back Notion, mainly due to its original business expansion while the new face masks business will be a bonus if it's sustainable. The management has warned that April & May will be the worst but expected a recovery in June. With the face mask business supposedly starting in June, may be it can help to save FY20Q2 result.

Matrix still haven't announce its FY20Q4 (Jan-Mac20) quarterly result yet, after being granted a delay until 15th July. Its results will be negatively affected but I'd expect worse result for FY21Q1 (Apr-Jun20).

Even though property market has slowed down for years, Matrix still registers increasing revenue and profit throughout the years. Its unbilled sales still stay at RM1.2billion at the end of Dec 2019. At least shareholders can expect consistent dividends for the next 1-2 years.

If not for the sales of industrial lands and total 5 quarters due to a change in financial year end in FY16, Matrix is a rare company which shows annual increasing revenue and profit without fail since listed in 2013.

Now we are already in the second half of 2020. So far this year I disposed 6 stocks and added 5 stocks. There are too many stocks in my portfolio now.

I nearly add another stock in June, but I hold back the strong buying desire due to depleted cash level. I need cash to subscribe to Jaks rights issue!

JAKS: Cash Cow In The Making?

Readers who follow this blog long enough should know that I invested in Jaks before. I bought in Feb17 but sold all in Nov17.

I bought Jaks because of its Vietnam power plant venture. It is a 2 x 600MW coal fired thermal power plant in Hai Duong with a BOT of 25 years. Jaks owns 30% shares in the JV with CPECC of China, with an option to increase the shares to 40%.

At that time, I didn't know how to predict the profit to Jaks when the plants are ready and running. I just knew that Jaks will pocket 100% the USD454.5mil (~RM1.8 billion) EPC contract.

The reason I invested in Jaks back in 2017 was simply because of this EPCC. It started to register good profit from its construction of power plant in Vietnam. I predicted that such profit will continue to rise.

I was aware that Jaks was struggling a bit in its property development & investment arms but I didn't expect those issues to be dragged for so long.

Anyway I sold all the shares in Nov17 due to various reasons and rarely looked back at the stock.

Jak's share price swung wildly from RM1.80 to RM0.40 then went up to RM1.50, back to RM0.60 due to Covid-19 and around RM0.90 now after the announcement of rights issue.

A famous investor quickly became the largest shareholder and then exited completely, which contributed to the movement of the share price.

Now, the power plants are about to be ready in Q3 of 2020. Construction profit from Vietnam will stop but profit from sales of electricity to Vietnam government will start.

How much can Jaks profit from the sale of electricity?

I don't have any idea until I read the article posted by DK66 in i3investor.

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The most reliable earnings guidance from Vinh Tan 1 power plant

What makes the most reliable earnings forecast ?

Peer comparison is the most reliable and convincing method for making earnings forecast if the subject exhibits the following characteristics;

• high degree of earnings stability and foreseeability
• high degree of resemblance in operating terms and conditions

The higher the similarity between the subjects in comparison, the higher the accuracy of forecast.

Peer comparison evaluation method alleviates the need for making excessive adjustments, assumptions and projections which in most cases would cloud the integrity of the results derived. It is often derived from actual operation of businesses under terms and conditions which may not be well understood or considered by the evaluators of other methodologies. In other words, it is the most realistic forecast of earnings potential of a company operating under the same geographical roof. 

Vinh Tan 1 Thermal Power Plant

It is located in Vietnam's southern province of Binh Thuan.

The coal-fired power plant includes two 620-MW super-critical generating units which is 55% owned by China Southern Power Grid, and constructed by CEEC. CEEC is the holding company of CPECC who is Jaks' partner in JHDP.

Vinh Tan achieved full commercial operation on 27th November 2018 (COD).

Why compare to Vinh Tan 1 ?

Hai Duong, Vinh Tan 1, and Mong Duong II are all 100% foreign owned power plants in Vietnam operating under 25 years BOT contracts with capacity around 1,200 MW. All their BOT contracts, power purchase agreements, coal supply agreements were signed around 2012.

Vinh Tan 1 is an extremely close model for Jaks Hai Duong power plant because; 

1. Both were awarded by the Vietnam Government around 2011
2. Both BOT contracts were signed with the Ministry of Industry and Trade (MOIT).
3. Both are Coal fired power plants costing around US$1.8b
4. Both around 1,200MW capacity
5. Both are 100% foreign owned and operated by Chinese corporations
6. Both are adopting chinese technology
7. Both under 25 years Build-Operate-Transfer (BOT) scheme
8. Both are guaranteed by Vietnam Government
9. Both Power purchase agreements signed with EVN
10. Both coal supply agreements signed with Vinacomin
11. Both under USD1.4b bank financing
12. Both under max 18 years loan tenure allowed by Vietnam government

Therefore, Vinh Tan 1 and JHDP should exhibit extreme high resemblance, if not identical.

Extracted from the 2019 Annual Report of China Southern Power Grid Corporation

Profit attributable to minorities interest

Vinh Tan 1 = 越南永新一期电力有限公司 

This is the first full year operation results of Vinh Tan 1 since commercial operation in November 2018

Net profit after tax for 2019 = RMB1,071m = RM652m (RM/RMB conversion rate of 1.64)

Hence, potential earnings attributable to Jaks

@30% = RM652m x 30% = RM196m = EPS RM0.30

@40% = RM652m x 40% = RM261m = EPS RM0.40

Free Cash Flow

Annual free cash flow = RMB1,609m = RM981m (RM/RMB conversion rate of 1.64)

Hence, potential free cash flow attributable to Jaks

@30% = RM981m x 30% = RM294m = RM0.45 per share

@40% = RM981m x 40% = RM392m = RM0.60 per share

Dividend Distribution 

You may noticed that there was no distribution of dividend in 2019 despite healthy cash flow of RM981m. This is due to the need to build cash reserves requirements for bank installments, working capital, maintenance, coal inventory, and statutory reserves. Aggressive distribution policy is expected once the cash reserve requirements are met as evident in the case of Mong Duong II, another similar plant in Vietnam. Below is the distribution pattern of Mong duong II since commercial operation in April 2015. The amounts are converted to Malaysian Ringgit at 4.35 to USD.

Year   Q1      Q2       Q3      Q4          Total
2016            9m       74m    122m      205m
2017           109m               113m      222m
2018           117m               78m        195m
2019           122m   196m   13m        331m

2018 dividend distribution was affected by the restructuring of long term project borrowings to reduce future interest costs. This has resulted in a one time restructuring cost of USD31m.

Note that first major dividend distribution by Mong Duong II started after 15 months of operation. By the end of 2019, Vinh Tan 1 has 13 months of operation. Hence, Vinh Tan 1 is expected to start dividend distribution in 2020.

Reservations 

Vinh tan 1 has only provided one full year operating results for evaluation in this article. There is no information to whether there were any material extraordinary gains of losses included in the operating results. Nevertheless, the nature of the business of Vinh Tan 1 whch is stable and foreseeable with majority of its earnings derived from capacity payments mitigated such concern. Moreover, my previous studies provides further assurance of the results of Vinh Tan 1. 

Vinh Tan 1 classifies its power plant as concession asset instead of loan receivable as required by the new international accounting standard. Adoption of old accounting treatment has resulted in lower total earnings of Mong Duong II by USD203m since operation with its 2018 earnings increased by USD40m after adoption of new accounting standard. Since continuing with old accounting treatment does not lead to overstatement in earnings of Vinh Tan 1, the higher earnings effect to JHDP is disregarded in this article on prudent grounds.

Conclusions

Earnings guidance provided by Vinh Tan 1 is by far the most straight forward and reliable estimate of JHDP's future earnings potential. Most evaluation methods require assumptions or management guidance and complicated computations. It is difficult for those without sufficient knowledge of those methodologies to express confidence. 

Vinh Tan 1's earnings represents results from actual operation of a similar power plant in Vietnam which is also managed by a Chinese corporation. 

Vinh Tan 1's earnings jibes with my previous estimates derived using various valuation methods.

This article concludes that JHDP is expected to deliver EPS of between RM0.30 to RM0.40 to Jaks. At PE of 10 to 15 times, Jaks is worth between RM3 to RM6.

I hope this article has raised your level of confidence in Jaks significantly.

Thank you and happy investing !

DK66

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I think this is an excellent and insightful prediction on Jaks's potential profit from the power plant. With potential EPS of 30sen, it's RM3 if PE is 10x!

Not only this, the predicted free cash flow of close to RM300mil a year to Jaks is just superb. This is possible due to the high depreciation and amortization of the power plant.

Even if the profit contribution from Vietnam is only half at RM100mil a year, the potential EPS of 15sen is still good compared to current share price of around 90sen.

After being delayed due to Covid-19, it looks like the power plant is preparing to deliver its first electricity in July. Commercial generation is expected in September for the first unit, while the second unit is scheduled to run in January 2021.

Anyway, this is not a buy or sell recommendation on Jaks. Nothing is without risks. So, invest at own risk. 

Jaks Worth Only 40sen?

On 22 May 2020, the share price of Jaks closed at RM1.03. 

Then it announced a corporate exercise of rights issue of shares (4 existing shares : 2 rights shares) and warrants (2 rights shares : 1 warrant).

The next trading day, its share price fell 15% to close at 87.5sen. 

I guess this type of reaction occurs to most cash calls as investors might be worry of the potential dilutive effect.

It might be the case in Jaks, and might also be possibly due the lowish illustrative price of Jaks rights shares at 40sen per share.

Public Bank quickly downgraded its target price substantially from RM1.13 to RM0.77 on "potential dilution of the cash call".

Obviously it will be a massive 50% increase in outstanding shares immediately, and potentially up to 75% when all the new warrants are converted into shares. EPS will be adjusted lower by 33% & 43% respectively. 

However, is there any dilution effect on shareholders' holding?

If I cut a large pizza into 4 equal pieces and I get one piece, I have 25% share.

Then there is a second pizza which is half the size of the first pizza up for sale. It is cut into 4 equal pieces as well and I'm eligible to buy one piece or 25% of it. Even though this piece is 50% smaller than the first one, it's still a 25% share for me.

Then I am given a voucher to buy 25% of a new pizza which is only a quarter of the size of the first large pizza. If I use the voucher to buy it, my overall share in these 3 pizzas is still 25%.

There are more pizzas now, but I still have 25% of all of them. So, there is no worry about the dilution effect for existing shareholders after the rights issue. 

Is it worth to buy those extra pizzas? If the pizzas are tasty and value for money, why not? If the pizzas taste terrible and are expensive, why should I buy more?

Even if you don't want to buy those extra pizzas, you can sell your rights and vouchers to get cash. You lose your shares but gain cash. 

The rights shares price is proposed at 40sen as illustrative purpose. The actual price will only be decided according to the latest share price when the final announcement is made. 

This 40sen does not mean that the true or expected value of Jaks share price is 40sen.

When the announcement was made on 22 May, the closing share price of Jaks was RM1.03, while the 5-day VWAMP (Volume Weighted Average Market Price) was RM1.07.

The price of rights share is usually determined by giving a discount to the TERP (Theoretical Ex-Rights Price).

TERP as its name suggests, is the theoretical adjusted share price after the rights issues are exercised. It is calculated as:

market value before rights issue + cash raised from rights issue

----------------------------------------------------------------------------

            total numbers of shares after rights issue

For Jaks case, the share price used to determine the market value is the 5-day VWAMP (RM1.07), while the outstanding shares that day was 651.1mil

market cap before rights issue =  RM696.7mil (651.1 x 1.07)

cash raised from rights issue =  RM130mil (325 x 0.40)

total shares after rights issue =  976.1mil (651.1 + 325)

TERP = RM0.85

The proposed rights share of 40sec each is a 52.94% discount to the TERP of 85sen.

The management mentions that rights share price will be at least 50% discount to the TERP. So it might change if the share price move substantially up or down from RM1.07 when the price fixing date arrives. 

I don't have a lot of experience regarding rights issue but I think it is common for such a huge "discount" given to the rights shares, even though in reality share price will also be adjusted accordingly so that shareholders do not get anything at "discount" or "free".

In other words, you may think that you get the rights shares cheap at 40sen and earn big from it immediately. Actually it's not, share price after the rights issue will be adjusted lower and you have nothing to gain or lose.

I have subscribed to Inari's rights issue with warrant before in year 2014. When the cash call was first announced in early July 2014, Inari's share price stood slightly above RM3, with 5-day VWAMP of RM3.09.

It was a 8:1 rights share + warrant. TERP was RM2.91 and the illustrative rights share price was just RM1.50, which was also around 50% discount to TERP.

Did Inari's share price fell to RM1.50? Of course no, not even close.

The final rights share price was fixed when the market share price was around RM3, so the rights share price was the same to the proposed figure of RM1.50.

For Dayang's rights issue in 2019, initially its proposed rights share price was at RM0.80, which was a 33% discount to TERP of RM1.14 and the 5-day VWAMP was RM1.23.

Dayang's share price initially dropped to around 90sen in respond to the cash call but later went up higher and higher to over RM2 before the rights issue ex-ed.

The final rights share price was fixed at RM0.92, with around 50% discount to TERP of RM1.83, while 5-day VWAMP was at RM1.92 which was 56% higher compared to the time when announcement was first made.

These show that rights shares offered at 50% discount to TERP is not uncommon.

Rights issues can be good or bad. If it is for good reasons, share price will likely go up. If not, share price will inevitably drop.

For Jaks, whether it's good or bad, it's up to you to decide.