Investing

How to improve Hengyuan’s share price

 

When an investor selects and buys a public listed company’s share, he expects to gain from dividend and the increase of the share price. The Board of Directors of the company can decide the amount of dividend and can encourage people to buy their shares by creating more publicity to push up the share price. They must realize that selling their shares is just as important, if not more important than selling their products. They can also decide to give out bonus shares and convertible warrants which will definitely improve the share price. The company should take the advantage of its listed status which is like Bank Negera has given the company a license to print money.

When the share price is high, the company can issue new shares to make acquisition of suitable land or companies.

As you can see the share price fluctuates quite widely every day. This is encouraging more day traders to speculate but discourage serious long term buyers from buying more shares.

Although its share price has gone up from Rm 3.00 to above Rm 10,00 within one year, it is still selling at a single digit P/E ratio. It deserves a higher rating.

I would like the board of directors to consider my suggestions as follows:

  1. Give out one bonus share for every one share held by shareholders.
  2. After the bonus issue, split one share to two shares, making the par value of 50 sen. As a result, one original share becomes 4 new shares. It is easier for a lower priced share to go up than a higher priced share.
  3. Give out 1 free convertible warrant for every 2 shares held after the issue of bonus share and splitting of shares.
  4. Pass a company resolution to buy back its own shares of not more than 10% of its total issued shares. The company should buy back its shares when it has dropped too severely to protect the share price.
  5. Pass another resolution to allow the company to place out not more than 10% of its total issued shares to fund managers. The buyers of this share placement will buy more shares when its price drops below its original purchase price. As a result, they will continue to support the share price.
  6. Declare to give out 40% of the total annual net profit as dividend. This dividend policy will encourage more long-term investors to buy or own the shares.

I trust the board of directors will consider my suggestion seriously.

Koon Yew Yin

 

 

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