A Large S$1.5b Rights Issue, And A Bitter Pill To Swallow
SMM’s double announcement of its rights issue and a non-binding MOU with KEP to combine their offshore marine businesses should not be a surprise. The former will nevertheless be painful for minority shareholders merely seven months after the prior rights issue at S$0.20. In the longer term, the merger (if successful) is positive and necessary, but short-term challenges remain. Maintain HOLD with a lower target price of S$0.124 (S$0.180 previously).