Fosun: MMG (01208) plans to raise funds through rights issue and convertible bonds, positioning CKH Holdings' strategic direction positively for the medium to long term.
The company continues to give a "hold" rating to MMG Resources, with a target price of 10 Hong Kong dollars.
Citi Research report stated that MMG (01208) announced a plan to raise $1.6 billion through rights issue and issuance of convertible bonds. The bank maintained a "hold" rating on MMG with a target price of HK$10. The bank believes that the risk-return balance of MMG's stock is favorable, especially in the environment of rising copper prices where these stocks are most likely to trend upward.
The bank believes that this mixed structure lowers MMG's weighted average cost of capital (WACC) while retaining full leverage on copper prices. Overall, although the rights issue may temporarily have a negative impact on the stock price in the short term, this fundraising event is still viewed positively from a strategic perspective for CKH HOLDINGS in the medium to long term.
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