OCR Group Berhad Building Momentum with Successful Rights Issue and Promising Property Prospects Ahead

OCR Group Berhad (“OCR”), an integrated property developer, recently raised RM46.8 million through a highly successful renounceable rights issue with free warrants, achieving an oversubscription rate of 101.1%. This response from the market speaks volumes about investor confidence in OCR's growth trajectory and development plans.

The rights issue, priced at RM0.035 per share, was offered with two free detachable warrants for every three shares held, leading to substantial interest, with total applications reaching 1.35 billion shares valued at RM47.3 million.

This strong show of investor support reinforces OCR’s strategy to accelerate key property projects. As the company steers ahead, backed by solid capital, it positions itself favourably to tap into Malaysia’s evolving property market dynamics.

With the Malaysian property sector on the path to recovery, supported by government initiatives, improving consumer sentiment, and infrastructure developments, OCR is well-placed to seize growth opportunities. The raised funds will propel the development of the company’s key projects, including Kyra in Shah Alam, OCR Templer in Rawang, and the Vertex Kuantan City Centre—all of which are central to OCR’s property portfolio, carrying a combined gross development value (GDV) of over RM2 billion.

The company has allocated 80.3% of the raised funds to fast-track these key property developments. Meanwhile, 10.7% of the proceeds will be used to improve OCR’s financial standing by repaying RM5 million in existing borrowings.

This move not only enhances the company’s balance sheet but also allows for greater financial flexibility, ensuring that OCR can continue to drive its growth strategy without being overly burdened by debt.

The remaining 9% of the proceeds will be allocated to working capital (6.4%) and to cover the costs associated with the corporate exercise (2.6%). By shoring up its financial resources and ensuring sufficient operational liquidity, OCR is better positioned to deliver on its projects and meet the demands of an increasingly competitive property market.

Alongside the rights shares, OCR issued free warrants which provide an additional layer of potential capital. The warrants, exercisable over the next three years, could generate an additional RM46.8 million in gross proceeds if fully exercised. These funds will be earmarked to support future working capital requirements, helping OCR to finance day-to-day operations and manage staff costs efficiently as it scales up its project developments.

This strategic foresight in raising capital through multiple avenues reflects OCR’s proactive approach to ensuring a stable and secure financial future, providing a cushion for its ongoing property developments and allowing for continued investment in new opportunities.

OCR’s Kyra project in Shah Alam, for instance, is poised to benefit from the city’s increasing popularity among homebuyers looking for affordable housing options within proximity to Kuala Lumpur. Similarly, the Vertex Kuantan City Centre in Kuantan is expected to attract buyers seeking modern living spaces and commercial properties, particularly with the growing industrial activity in the region due to projects like the Malaysia-China Kuantan Industrial Park.

OCR’s successful rights issue, paired with its promising project pipeline and strategic financial management, sets the stage for sustained growth in Malaysia’s property market. With substantial capital raised, the company is accelerating the development of key projects that are expected to capture strong demand in high-growth areas. The company’s ability to attract investor confidence, evidenced by the oversubscription of its rights issue, highlights OCR’s resilience and potential in the property sector.

Now, OCR is trading at RM0.06 per share, which is steeply undervalued given the fresh funds the group had generated, as well as the strong pipeline of projects ahead. The current price of OCR poses a significant upside potential ahead for them.