<News Alert> GOME (493.HK): placement at HK$0.4 per share
GOME announced a top-up placement of 1.96bn new shares, representing approximately 5.81% of the issued share capital, to not less than six independent placees. The placing price is HK$0.4 per share, equivalent to a 12.09% discount from the closing price of HK$0.455 per share on Jun 27, 2022. The estimated net proceeds, after deduction of related fees and expenses, will be approximate HK$776.5mn and GOME intends to apply the net proceeds for the repayment of the debt, and as general working capital including for expansion of online and offline dual-platform business. As of Jun 28, 2022, major shareholder of GOME held around 19.8bn shares, representing approximately 58.68% of the company’s total number of shares and the percentage will decrease to 55.4% after the placement.
We believe the placement will be negative to share price given the investment in new business strategy will take time to bear fruit, especially in the current weak macroeconomic environment and weak consumer confidence. We maintain HOLD with TP unchanged at HK$0.55.