PETALING JAYA: Property developer Ibraco Bhd is gearing up for long-term growth with its proposed private placement of up to 49.6 million new shares.

       More excitingly, the exercise could potentially see the entry of strategic investors into the Sarawak-based company to realise synergies through this exercise, said TA Research.

       Last Friday, Ibraco announced the proposed private placement exercise, representing up to 10% of its total issued shares, to third-party investors to be identified later.

       Based on an indicative issue price of 47 sen per placement share, the exercise is expected to raise gross proceeds of up to RM23.3mil, which is expected to be utilised mainly for property development funding and working capital.

       TA believes the proceeds will help to ensure timely delivery of the group’s existing property development projects while at the same time maintaining its net-gearing levels below the board’s internal gearing threshold of 0.5 times. “Nonetheless, we do not discount the possibility of the potential entry of strategic investors to realise synergies through this private placement exercise,” it added in a report.

       Assuming the completion of the exercise at the end of financial year 2021 (FY21), TA estimates that the exercise could increase the group’s FY22 net profit by about 1% due to additional interest income. It would also reduce gearing level from 0.47 times as at end of second quarter of 2021 to 0.39 times.

       However, the enlarged share base is expected to dilute its FY22-FY23 earnings per share by some 8% and reduce its price-to-book-based target price by 4.6% from 65 sen to 0.62 sen per share.The research firm, which maintains a “buy” call on the stock, expects Ibraco to benefit from infrastructure spending in Sarawak.

       As of end-Aug this year, the group’s unbilled sales and outstanding construction orderbook stood at RM238mil and RM329mil, respectively, providing clear earnings visibility going forward, it added.