WESTPORTS MAY REPLACE INARI AS KLCI CONSTITUENT -- CGS-CIMB

KUALA LUMPUR, May 24 (Bernama) -- Westports Holdings Bhd is likely to replace Inari Amerton Bhd as a constituent in the FTSE Bursa Malaysia KLCI (FBM KLCI) Index during an upcoming review as the latter has failed to meet the liquidity and free float criteria. 

CGS-CIMB Securities Sdn Bhd said Inari has dropped to the 36th position in full market capitalisation ranking, which suggests that it will be at risk of being removed from the list at the next KLCI semi-annual review.

"Hap Seng Consolidated is at a higher market cap ranking compared to Westports but our calculation suggests that it did not meet the liquidity criteria. 

"Westports is likely to gain interest due to its potential inclusion while some selling pressure could be seen on Inari due to its potential exclusion from KLCI," it said in a research note today.

FTSE Russell is due to announce the results of its upcoming semi-annual review of the FTSE Bursa Malaysia Index Series on June 2, and the changes will be effective on June 20. 

The research firm noted that the FTSE Bursa Malaysia index ground rules stipulated that a security would be inserted into the FBM KLCI during the periodic review if its market cap has risen to the 25th position or above and a security would be deleted at the periodic review if it has fallen to the 36th position or below.

It said besides market capitalisation criteria, companies will need to satisfy free float of 15 per cent or more, and a liquidity screening test to qualify for KLCI inclusion. 

"The ground rules state that for the liquidity screening test, a non-constituent must trade more than 0.05 per cent of its free float-adjusted shares in issue based on its median daily trade per month in 10 out of the preceding 12 months. 

"An existing constituent must trade at least 0.04 per cent of its free-float adjusted shares in issue, based on its median daily trade per month in eight out of 12 months," it said. 

CGS-CIMB has placed its "hold" recommendation on Westports with target price (TP) of RM3.78 per share and "add" call on Inari with TP of RM3.40 per share.

As of 10.20 am, Westports and Inari were each one sen higher at RM3.81 (with 81,000 shares traded) and RM2.51 (with 1.51 million shares transacted), respectively. 

-- BERNAMA