Published:Friday 12:35 AM
Directors of Stationery and Office Supplies Limited on Wednesday approved a 9:1 stock split of the company’s ordinary shares, aiming to drive up demand and trading of the shares by making them cheaper to acquire.
A day after the board decision, the junior market stock traded down by nearly five per cent to $32.72, but that’s after spiking to an all-time high of $34.31 on Wednesday.
A nine-way split would cut the trading price to the $4 range.
The board will call an extraordinary general meeting to seek shareholders’ approval on the split, as well as reset SOS’s authorised capital.
“We are looking to have the EGM towards the end of July. We have a minimum of 21 days’ notice before the meeting is called, so by the time we get everything together it will put us at the end of July,” said Managing Director Allan McDaniel.
A year ago, SOS’ stock price was hovering around $12 and largely traded at volumes below 100,000, but since its disclosure on June 19 regarding a board meeting to discuss the split, volumes rose above 500,000 shares traded for two consecutive days.
The company has 500 million units of authorised share capital, of which 250.12 million are already in issue. The split, if approved, will increase the number of tradable shares to 2.251 billion units and would create more units for shareholders, but would raise no funds for the company.
Stockholders will end up with more shares in their hands, but at a lower price proportionate to the split, with no change in the value of their holdings.
The planned 9:1 split marks a first for the company, which reported record revenue for the financial year 2022 and again hit another revenue milestone in first quarter 2023, solidifying its recovery from the COVID-19 pandemic.
The decision to undertake a stock split also comes when SOS is expanding, its latest move being a partnership it struck with regional supplier of school and office products, the Office Authority Limited, for distribution of three of its furniture lines – Evolve, Image and Torch – in Trinidad and Tobago. Likewise, SOS will sell notepads produced by The Office Authority in Jamaica, which are smaller in dimension than SOS’s own products manufactured under its proprietary SEEK line that are also priced lower.
The company is pumping $60 million in the buildout of another warehouse on its Beechwood Avenue, Kingston property as storage for its SEEK notebook manufacturing business, as well as an open area to host clients. It is also upgrading its delivery fleet, with three additional units planned to serve Kingston and Montego Bay.
Despite a 22 per cent rise in revenues for the first quarter ended March 2023, higher expenses weighed on SOS’s overall performance, pulling the company’s earnings down 10 per cent year-on-year to $94 million.