Wijaya Karya Tbk (WIKA) new stock is predicted to be IDR 2.300-2.450 or discounted by 10%-15% in volume weighted average price IDR 2.530-2.900. Rights issue will be absorbed because WIKA has the potential to keep a contract with a higher value after corporate action.
CIMB Securities predicts that the price is in the upper limit of the range of IDR 1.525-2.505 per share. The range is based on the weighted average price over a period of 30 days, 60 days, and 90 days. This could show a potential dilution of stock ownership of 29%-30% if the holders do not execute their rights.
“The price drops more than 20% in the past two weeks or drops 22% from the highest price. The drop could be triggered by the fast reaction due to the negative sentiment and low tax amnesty (TA),” said Aurelia Barus, an Analyst of CIMB Securities. Waskita Karya Tbk (WSKT) and Adhi Karya Tbk (ADHI) also fell 10%-20% before rights issue.
The volatility during rights issue has been more limited due to the improved sentiment of TA and the potential revenue from new contracts of IDR 28.7 trillion. The contract rise will encourage its profit FY17 by 37%.
CIMB Securities recommended BUY for WIKA with a target price of IDR 4.250. (*)
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