Exel Composites: Planned rights offering stole the spotlight
Exel's Q1 figures were broadly below our expectations due to the timing of deliveries. However, on the day of the results, the spotlight was stolen by the company's planned rights offering of a significant size to strengthen its balance sheet and accelerate its strategy. We expect the offering to result in a significant dilution of the current share series and potentially put selling pressure on the stock. In light of this and the still uncertain earnings turnaround, we see the stock's risk/reward ratio as unsatisfactory in the short term, although we believe the financing gives the company room to execute on its strategy.
