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2009-4-24 10:57:00 a.m. HKT, XFNA
DJ MARKET TALK: Techtronic Off 13.5%; N/T Weakness To Abate -CIMB
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| 1046 [Dow Jones] Techtronic Industries (0669.HK) tumbles 13.5% to HK$4.17 on concerns of dilution impact from HK$1.42 billion fund-raising via issuing convertible bonds with warrants; if all bonds converted, warrants exercised, company will issue 279.4 million new shares, 15.7% of enlarged share capital. CIMB says Techtronic has HK$5.57 billion of debt outstanding at end-1Q09, of which HK$2.64 billion is short term; convertible bond issuance will shift ratio of short-term debt to total debt from about 50% to 25% which positive, but given higher interest cost (annual interest rate of 8.5%), heavy dilution, tips shares may weaken in very near term. Still, keeps Outperform call, HK$5.21 target price, as "there is room for the share price to go higher as concerns over gearing levels and the demand environment abate over the following quarters." Volume hefty at HK$95.7 million, already more than all of yesterday; solid support likely psychological HK$4.00.(RLI) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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