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Sri Lanka Equity Forum » Stock Market Talk » What do you think about Browns Group Reforms: BRWN, BIL & FLCH ?

What do you think about Browns Group Reforms: BRWN, BIL & FLCH ?

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MoneyLover

MoneyLover
Senior Equity Analytic
Senior Equity Analytic
According to stock exchange disclosures on 22nd & 23rd May 2018;

1. BRWN has proposed 2 for 1 right issue @50/- (to retire debts).  

2. Browns Capital (FLCH) decided to amalgamate with its ultimate parent Browns Investment Pls (BIL) where BIL will be the remaining entity. BIL holds 60.79% shares in FLCH. 

Net Assets/share at Group level in BRWN, BIL & FLCH as at 31/12/17 was 253.87, 4.13 & 7.24

BRWN, BIL & FLCH closed yesterday (22nd May) at 69.90, 2.90 & 4.40.

What do you expect to happen on BRWN, BIL & FLCH ??

MoneyLover

MoneyLover
Senior Equity Analytic
Senior Equity Analytic
End of 25th May Prices :
BRWN: 58/- (down more than 10 rupees, since 2:1 right issue announcement) 
BIL: 2.90 (down by 10 cents)
FLCH: 4.40 (flat)

BRWN's Net Assets per share: Rs. 253.87
Before-right issue: Rs. 253.87
After-right issue: Rs. 118.96

Amounts to be raised by right issue: Rs. 7087 Mn (about 7 Bn)
Short-term borrowings at 31/12/17 about Rs. 5.5 Bn
Other loans Rs. 2.4 Billion
Finance Cost for 9M2017 over Rs. 2 Bn

Please share your predictions on share prices comming weeks (i.e. BRWN, BIL, FLCH) .....

factFINDER

factFINDER
Manager - Equity Analytics
Manager - Equity Analytics
@MoneyLover wrote:According to stock exchange disclosures on 22nd & 23rd May 2018;

1. BRWN has proposed 2 for 1 right issue @50/- (to retire debts).  

2. Browns Capital (FLCH) decided to amalgamate with its ultimate parent Browns Investment Pls (BIL) where BIL will be the remaining entity. BIL holds 60.79% shares in FLCH. 

Net Assets/share at Group level in BRWN, BIL & FLCH as at 31/12/17 was 253.87, 4.13 & 7.24

BRWN, BIL & FLCH closed yesterday (22nd May) at 69.90, 2.90 & 4.40.

What do you expect to happen on BRWN, BIL & FLCH ??



Right issue of 2:1 will lead BRWN to down towards 50/-.

Many people (but Ishara Nanayakara and his own companies e.g. Churchill Capital Pvt Ltd/Oxford Capital (Pvt) Ltd) won't exercise rights. This is part of the master plan to take control of Browns Group directly under Ishara Nanayakkara.




Refer recent disclosures on directors dealings under FLCH. Ishara Nanayakara and his own companies Churchill Capital Pvt Ltd/Oxford Capital (Pvt) Ltd  has brought more than 10% in FLCH and now going to merge with BIL which holds over 60%.


It will be interesting to see the rate that BIL.N exchange with FLCH.N.
Whatever the case I don't expect sharp appreciation of price of BRWN or BIL until Ishara taken the control directly.
(Similarly, he let Orix Japan to exit by selling entire  in LOLC stake to Ishara)

Therefore, in my opinion BRWN & BIL is only for long-term investments.

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