Sern Kou Resources Bhd (-ve)

SHARES in furniture maker Sern Kou Resources Bhd (fundamental: 0.45/3, valuation: 0.2/3) triggered our momentum algorithm last Friday as its share price fell five sen or 3.03% to close at RM1.60.

A total of 1.15 million shares exchanged hands, exceeding its 200-day average volume of 109,297 shares. Over the past 12 months, the stock has gained about 41.59%.

Sern Kou has proposed a two-for-one share split and a free warrant issue. The share split will double the group’s issued share capital to 240 million shares and is expected to result in a downward adjustment to the market price of existing shares.

Sern Kou plans to issue 120 million free warrants after the share split is completed, with an exercise price of 40 sen each.

Assuming all 120 million warrants are exercised at the fixed price, a total of RM48 million is expected to be raised for the working capital of Sern Kou.