STXPO announced yesterday that it will convene an extraordinary general meeting on 5 June to seek approval for the issue of new shares and/or convertible securities. The size of the new issue of shares cannot exceed 50% of the total outstanding share base, with a minimum of 30% to be granted to existing shareholders on a pro-rata basis, and a maximum of 20% to be granted on a placement basis. In our opinion, STXPO may be preparing for a possible rights issue and/or private placement in the coming weeks. Half of 2010 and virtually all of 2011 capex remains unfunded. Maintain UNDERPERFORM and SOP target price of S$8; earnings under review. We believe that further share price upside is limited and investors should take profit. We are also concerned about the dilution of a potential rights issue. Also, we think that the Baltic Dry Index is ripe for a pullback.