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11 comment(s). Last comment by Salsabila at Apr 24, 2019 6:43 PM
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truthseeker1
493 posts

Posted by truthseeker1 > May 22, 2015 10:09 AM | Report Abuse

Please do a study on My Eg. Why people in i3 still think it is cheap after giving 1 for 1 bonus.


contemplator
104 posts

Posted by contemplator > May 22, 2015 10:37 AM | Report Abuse

Truthseeker1: PE of 25= not cheap at all. Not all people willing/know/bother to use their calculator (or own thinking) rather than paying heed to friend's tips or banking "investment research". By the way i don't invest in stock that survived due to political reason and do collateral damage to the country


contemplator
104 posts

Posted by contemplator > May 22, 2015 10:38 AM | Report Abuse

Fimacorp is an example that it split its share until full valuation is being reached.


contemplator
104 posts

Posted by contemplator > May 22, 2015 10:50 AM | Report Abuse

Truthseeker1: I don't know whether myeg will receive any contracts (if you read about RMK 11) from GOV that fatten its wallet by pressing Malayisans. This kind of profit i rather pass. PE of 25, low dy, low NTA. IF it is highly debted then the ROE of 25% is rubbishy to me. Berkshire Hathaway PE is 21. Sometimes what chicken king and its gengs can do to this country make me rub at my eyes and wonder (curse them) :)


M17
23 posts

Posted by M17 > May 27, 2015 1:49 PM | Report Abuse

Comtemplator,

Thanks for sharing. Regarding the bonus shares, which year of the Warren Buffett's letters are you referring to? Thanks.


NOBY
935 posts

Posted by NOBY > May 27, 2015 2:23 PM | Report Abuse

2. Bonus share

The company fork out the its treasury shares (shares that the company buy back from the stock market) and distribute them according to its shareholders by weightage of shares owned.

Regarding this, please read the Warren Buffett's letter to shareholders, the logic is all there. Thank you Warren.



Thinking back in Malaysia, although the shares buy back can be violated but the largest shareholders also receive collateral damage. Not as abusive as voracious ESOS.


I thought bonus shares were issued from retained earnings. Basically company must have sufficient reserves to issue bonus share. Treasury shares can be distributed as share dividends I believe. Company can only buy back max up to 10% of the issued shares. Anyway, the bottom line is the same, value of the company does not change.

http://www.businessdictionary.com/definition/bonus-issue.html


contemplator
104 posts

Posted by contemplator > May 27, 2015 4:25 PM | Report Abuse

Lucky lum, acutally Warren Buffett constantly discuss how he view about share repurchase especially for Berkshire Hathaway. However you may find that the 1999's letter to shareholders (page 16) particularly useful.

Have a visit to 2002's letter to shareholders and get impressed by Warren Buffett's humor and wisdom on how the Board Directors swindle shareholders.

I also pay a great attention to treasury maps (disguised in book form) recommended for reading by WB in his letters to shareholders. Don't miss the exciting part yea, enjoy your reading.


contemplator
104 posts

Posted by contemplator > May 27, 2015 4:54 PM | Report Abuse

Mr Noby,

First i would like to apologize because the term I used is a bit misleading.


The meaning of bonus share that I mentioned in the article actually refers to distribution of share bought back (as known as treasury share) to shareholders according to proportion of share owned compare to whole company. It would be more properly to be termed as distribution of treasury share/ share dividend.

I am not an accountant and please correct me if I am wrong.

The other condition that the shareholder can receive "bonus/free" shares is when the listed company issue additional shares.

Let's take a COMPANY ABC as an example:

SHARE CAPITAL as at 02APRIL 2015
Authorised Capital:RM100,000,000
Issued and Fully Paid Up Capital :RM50,000,000
Classes of Shares :Ordinary Shares of RM1.00 each
Voting Rights :One vote per ordinary share
No. of Shareholders:2,436


For Company ABC, there are 50,000,000 shares circulating in the market.

The company can issue additional 10,000,000 to its shareholders. By proportion, for every 5 shares held, 1 new/bonus/free share will be given.

The expense of issuing additional/new 10,000,000 share will cost
RM 10,000,000 to the company. The fund will be charged under title of share capital. The fund i think usually come from retained earning. (borrowing loan to issue additional shares sound awful)

However, note that the ROE,DY,EPS will drop because more circulating shares (larger denominator)



In summary
1. distribution of share bought back (as known as treasury share)

2. listed company issue additional shares


NOBY
935 posts

Posted by NOBY > May 27, 2015 5:07 PM | Report Abuse

contemplator... agree with your explanation. Except for the part ROE decreases. ROE will not change since ROE = Net Income / Equity. The total net income and equity remains the same before and after bonus issues.


contemplator
104 posts

Posted by contemplator > May 27, 2015 5:36 PM | Report Abuse

Hi Noby, yeah oh... ROE won't drop. Thanks for enlightenment :)


Salsabila
36 posts

Posted by Salsabila > Apr 24, 2019 6:43 PM | Report Abuse

Inix just make an announcement ESOS for rm0.10

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