Mother and Warrants, and other type of Warrants

This is a personal opinion/study of Mother and Warrants prices when Mother undergo a split or Bonus issue. The reason I am writing this article is to gather more information and opinion on Mother and Warrants, and other type of warrants prices, and not meant to discredit any counters or “sifu-sifu” which have touch on this subject. I am still studying other type of warrants, please excuse me if I make a wrong comparison.

On the 4th of Nov., 2016, Press Metal has had re-adjust its Mother and Warrants prices due to the following exercises:

(i) Proposed Share Split

Proposed share split involving the subdivision of every one (1) ordinary share of RM0.50 each in PMB (“PMB Share”) held by the shareholders of the Company on an entitlement date to be determined and announced later, into two (2) ordinary shares of RM0.25 each in PMB (“Subdivided Shares”).

(ii) Proposed Bonus Issue

Proposed bonus issue of up to 1,153,954,706 new Subdivided Shares (“Bonus Shares”) to be credited as fully paid-up on the basis of two (2) Bonus Shares for every five (5) Subdivided Shares held on the same entitlement date as the Proposed Share Split (“Share Split and Bonus Issue Entitlement Date”).

The following is the screenshot of the Mother and Warrants share prices on the 28 Oct., 2016 (before) and 4th Nov., 2016 (ex-date):

Notice the mis-pricing of PMETAL-CP of -25.33%?

This is the graph of the mis-pricing before and after corrected conversion ratio.

I am digging out this old history because I noticed (personal opinion) that one counter (sorry, I declined to name that counter but can drop an obvious hints DxHx) is having some of its warrants expiring soon and the Mother price being chased up so that the warrants (son and daughter) will follow. If the Mother stay up after warrants expired and the conversion perfectly executed, then it is perfectly alright.

My analysis:     

Hx31 is in the money, expiring on 31 July, 2017 - a good bet.

Hx27, Hx33 and Hx34 are for those who take high risk.

The rest are neutral, with good chance of making money.

Those who bought 30 days ago making more than 100% return, what will be the next 30 days?

Bull market is good for Call warrants.

100% gain within 30 days

Hx31 still steady although overall market correction

I have had spotted the mis-pricing last time but did not do anything to capitalise on the error as I don’t understand much on warrant. So is now. The learning continues...

Trade at your own RISK. Happy Trading.

Note: PMETAL-CO and PMETAL-CP are issued by RHB IB and Kenanga IB respectively.

Reference: https://www.malaysiawarrants.com.my/home?gclid=CL21i_Kq-NMCFc6HaAod4f8JCQ