Lankem’s Rs. 677 m Rights Issue goes undersubscribed

Lankem Ceylon Plc's Rs. 677 million worth Rights Issue has been undersubscribed. 

When the issue closed the Company has managed to draw only subscriptions for 17.6 million shares worth Rs. 352.3 million. 

The original plan was to issue 33.85 million shares at Rs. 20 each aiming at raising Rs. 677 million. The basis was one new ordinary share for every one share held. 

Funds were to be raised to augment working capital requirements.

Net assets per share of Lankem was Rs. 25.88 as at 31 March 2021, up from Rs. 20.56 a year earlier. In the March 2021 quarter the highest share price of Lankem was Rs. 34.20 and the lowest was Rs. 24 before closing at Rs. 27.10. The share price closed yesterday at Rs. 26.90 down by 5.6%.

The public float of Lankem is 14.75% held by 2,104 shareholders. Major shareholders are The Colombo Fort Land and Building (44.3%) and related party E.B. Creasy and Company (32.4%).

Analysts viewed the under subscription by almost half as disappointing as it posted stellar performance despite the COVID pandemic in FY 21 including return to profitability first time after FY 2014/15.

It posted a strong Q4 performance for the FY 2020/21 recording a Pre-Tax Profit of Rs. 229 million against a loss of Rs. 185 million as reported in 2019-20.  The company achieved a quarterly revenue of Rs. 1 billion recording a growth of 78% in comparison to the same period as last year.

The company closed the financial year on a high, achieving a revenue of Rs. 3.4 billion in comparison to Rs. 2.9 billion achieved in the previous year, recording a growth of 18%. The Gross Profit of Rs. 827 million is an increase by 46%. The EBIT of the company was Rs. 521 million against Rs. 66 million reported in 2019/20. Profit before tax was Rs. 36 million. 

Lankem Ceylon as a Group which comprises hospitality, packaging and distribution clusters posted a revenue of Rs. 17.6 billion up 14% from FY20. Group pre-tax loss was Rs. 364 million down from Rs. 1.1 billion loss in FY20 and after tax loss too was halved from Rs. 1 billion to Rs. 511 million.