There’s a silver lining behind Ezra’s sharp share price crash

It lost 22% in just three trading days.

Ezra suffered a painful sell-off after it revealed its intentions to raise $405.2m via a rights issue and a convertible bonds issue. The highly-leveraged offshore player lost 22% in just three trading sessions, according to OCBC Investment Research.

OCBC noted that though the fundraising move did not come as a surprise, the market might have been taken about by the size of the issue.

Apart from helping Ezra improve its balance sheet and lower its gearing, there’s another silver lining behind Ezra’s suffering--the counter is now trading at a price which is low enough for a re-rating.

“It is quite likely that the group would be able to raise the proposed US$150m from the rights issue, should shareholders approve it in an EGM to be convened. Given that the share price has corrected to S$0.305 vs. our cum-rights fair value of S$0.32, we raise our rating to hold,” said OCBC.