PETALING JAYA: Can-One Bhd’s share price fell as much as 4.20% to RM2.08 in early trade after an analyst flagged its mandatory general offer (MGO) for Kian Joo Factory Bhd as having a steep price tag and not being earnings accretive.
At 11.50 am, the stock was trading at RM2.10 with some 105,200 shares done.
Meanwhile, Kian Joo Can Factory Bhd, which hit limit up last Friday, rose as much as 6.46% to RM2.80.
It was trading at RM2.76 at 11.50 am with 1.76 million shares done.
MIDF Research said in a note on Friday that while the MGO presents Can-One with the opportunity to further increase its shareholding in its associate, additional earnings contribution could also be offset by higher borrowing costs.
Can-One’s net gearing could increase to 2.19 times from 0.51 times upon full acceptance of the MGO, as Can-One will have to gear up to fund the acquisition.
MIDF Research retained its “neutral” recommendation on Can-One with an unchanged target price of RM2.09 pending the outcome of the MGO.
It said a high acceptance level may result in a downward revision to its target price and possibly a downgrade in its recommendation.