Why Global Testing share price not affected by recent share placement?

I have been reading some forums on Global Testing and noticed that some investor's education(in stocks) less than satisfactory. There was another thread which claimed that TMSC and other shareholders are selling Global Testing on the open market following the share placement news.

To clear some doubts, i wrote this article here. Global Testing placed 245,000,000 Ordinary Shares comprising:- (A) 175,000,000 New Shares; And (B) 70,000,000 Vendor Shares. The net asset


Thanks for your question as to why Global Testing’s net asset value (NAV) went up instead of down after the issue of 175 million new shares. Why isn’t there a dilution of its NAV?

The NAV went up because the new shares were issued at 31.25 cents which is higher than the pre-issue NAV of 22.54 cents.

The 175m new share actually was supposed to cause a dilution in the share price as the issue price of 175m new shares was at a discount of 4% to the prevailing market price of 32.5 cents (if my memory serves me right). The announcement of the new share issue caused a pull back in share price for only a day or so. When the market realized that the proceeds would be used for expanding and upgrading the production facilities in anticipation of a soaring demand, the share price then reversed its pull back and skyrocketed to 38 cents within a matter of days.

Normally new share issues cause a dilution in share price but not NAV because NAV is usually less than half or even one third of the traded share price for manufacturing and trading companies and a smaller fraction for service companies like education or IT services. But for property and hotel companies, share prices are commonly 20 to 40 % below NAV. For such companies, a new share issue could result in a dilution of NAV.