Sunday, December 4, 2011

some thoughts on mmi

last week saw the share price of mariwasa siam holdings (pse symbol: mmi) shoot-up from 1.10 (24 november 2011 closing price) to 3.70 (2 december closing price).

it posted the more than 3-fold share price increase (3 consecutive limit up days) after it disclosed during the trading session of 28 november that its board of directors approved a reorganization of the mariwasa group and that a special stockholders meeting will be held 12 january 2012 to approve the reorg plan.

maybe mmi is just catching up on the recent wave of limit-up plays.

but a closer look at the reorg plan and stockholders meeting agenda may provide a speculative justification for the price surge (admittedly on negligible volume).

- the reorg will erase the 516 million deficit from its balance sheet
- pay off a portion of mmi's debt via shares of mmi's subsidiary mariwasa-siam ceramics (msci)
- return to the shareholders of the capital surplus generated by the reduction in par value via proportional distribution of msci's remaining shares.

the 3 actions point to:

- mmi may already pay dividends from future unappropriated retained earnings
- aside from directly owning mmi shares, stockholders will now directly own msci shares (a defacto property dividend?)
- possible future pse-listing of msci shares (this is pure speculation with no basis whatsoever).

of the 6 stock market forums im monitoring (not facebook-based) only 1 has so-far devoted a separate thread to mmi but still with no discussion on the reorg and its possible implications. maybe because mmi is an unknown, highly illiquid, thus not a punter's stock.  

which may indicate that no one is really seriously looking at mmi except for a handful of players with a liking for illiquid and unknown issues. and thus last week's price action may just be a fluke. however, the special stockholders' meeting is still on the 12th of january. many things could still take place between now and then. who knows? me, im just a kibitzer curious if this coming week we will see another series of limit up closings for mmi.