The 33% Dilution Effect of “ORI”, Who Gains, Who Loses?

Breaking down the dividend of ORI to see the dilution at ฿11.36/share, posing both gain and loss for investors.

ORIGIN Property Public Company Limited (ORI)’s price has decreased ฿5.70/share or 33.53% to close the morning session at ฿11.30/share. The highest is ฿11.60/share, while the lowest is ฿11.10/share with 116.85 million baht in value. The ceiling and floor of the day are ฿14.70/share and ฿7.95/share, respectively.

 

ORI has scheduled 17 October 2018 as the date to record the names of the shareholders who are entitled to the dividend payment (Record Date) from the operational results ending June 30, 2018, and 31 October 2018 as the date for dividend payment.

The payment will be divided into cash and shares. The payment in cash will be at the rate of ฿0.04/share, while the other dividend payment if ฿0.29/share will be paid in form of newly issued shares at the ratio of 2 existing shares to 1 stock dividend.

The drop in ORI’s price is due to the dividend payment in the form of newly issued shares at the ratio of 2:1 or 33% of registered capital, resulting in 33% dilution effect of ORI’s price for these newly added shares.

 

“Kaohoon Online” traces the price back to the day before the ex-dividend date to see that the price closed at ฿17/share, while the price after issuing dividend should be lowered to ฿11.39/share or 33%. However, if today’s price drops below ฿11.39/share, the investors who had purchased ORI at ฿17/share will result in a loss as the price is lower than the dilution effect after issuing the dividend.

On the other hand, if the price closes higher than ฿11.39/share, it will result in a gain for those who had purchased ORI at ฿17/share as the price drops according to the dilution effect, but be able to gain despite its issuing the dividend in cash that normally plunges the share on the ex-dividend date.

Moreover, shareholders will receive additional shares from the dividend in the form of share as a compensation of the drop in ORI’s price. Nevertheless, the newly added shares will cause lower earning per share if the company does not gain more profit, resulting in those who purchase the shares at the price below the dilution effect, which is ฿11.39/share.

 

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