OCR Group’s Warrant Might Provide 60% Upside for Investors?!

Shareholders of OCR Group Berhad (KLSE: OCR) are encouraged to participate in the company’s upcoming rights issue with warrants offer, which promises substantial returns.

According to Wan Mohd Farid Wan Zakaria, a senior lecturer in finance at Universiti Teknologi MARA (UiTM), highlighted that eligible investors could expect a 60% return through this rights issuance, translating to an increase in value from 9.5 sen to 15 sen per share upon conversion.

Under this corporate exercise (rights issue with free warrants), OCR Group plans to raise capital by issuing 134.2 million new shares priced at RM0.095 per share.

Shareholders who own shares as of 5 September 2024 are entitled to receive three new OCR shares for every two shares held. This package includes free detachable warrants (OCR-OR), with each lot offering 60% gains upon market trading starting 6 September 2024.

Wan Farid explained, "Investors who subscribe to this offer can expect significant benefits, particularly given that the trading price target is set at 5 sen. This effectively translates into a 60% return from the offered 3.5 sen per share (another 1 sen coming from 2 free warrants at 0.5 sen per warrants). The offer period runs until 23 September 2024, providing ample opportunity for shareholders to participate."

Effectively, this is free money for investors who know how to take advantage of it.

The capital raised will largely be used to fund the group’s new project in collaboration with Lecca Properties (M) Sdn Bhd, focusing on the development of a land parcel valued at RM45 million in Selangor.

Wan Farid also pointed out that OCR Group’s acquisition of Templer land measuring 18.37 acres, with a gross development value (GDV) of RM313.0 million freeholder landed project/

Additionally, OCR’s recent financial results reflect the company’s improving financial position. In the first half of 2024, OCR Group’s revenue rose to RM80.6 million, marking a significant increase from RM68.7 million in the same period last year.

With these initiatives, OCR Group is poised to enhance its market presence and deliver continued value to its shareholders.

Wan Farid concluded, “Given the current developments and OCR’s strategic expansions, the rights issue presents an excellent opportunity for investors looking to capitalise on the company’s promising growth trajectory.”