CK>> Wah! Why so many people were still willing to pay a premium for both Kencana and SapuraCrest while they were already known the share prices were trading above merger prices (or may be they don't know)?

Kencana's highest is RM3.31.
SapuraCrest's highest is RM5.18.

Well, let's do a quick mathematics calculation. Assumption I'm an ignorant trader and bought 10,000 units of Kencana @ RM3.30, which was 10% premium to the merger price RM3.00. While I still dont know what is going on here, because newspaper written there Target Price=RM 3.66 @_@'''. So I just bought it.

My investment is RM3.30 x 10,000  = RM33,000

When Kencana de-list and re-list, I will get:
a) Newco Share = 1.257 x 10,000 = 12,570 units of Newco share @ RM 2.00; Value = RM25,140
b) Cash =  RM0.486 x 10,000 = RM4,860
Total = RM 25,140 + RM4,860 = RM30,000

1st leg Loss = RM33,000 - RM30,000 = RM3,000 (You loss RM3,000 before Newco is re-listing)


How to breakeven? Well, you have now 12,570 units of Newco shares in hand. Each unit worth RM2.00. To get back your RM3,000, you should now praying Newco share to gain this much when first listing:
RM3,000 / 12,570 = RM0.24

Yes, you are now praying hard to hope that Newco share to gain at least 24 cents in order for you just to BREAKEVEN!!!!  In term of percentage, you are looking for 0.24/2.00 x100% = 12% gain when it first list, just to BREAKEVEN!!! Pay 10% premium but need 12% to just breakeven.

Erm... What happen if it lists at price below RM 2.00? You will be suffering from 2nd leg loss~ Haha...

Anyway, I saw EPF are keep chasing these two stocks at premium. Are they ignorant trader/investor? I don't think so, they are professional, smart money manager. But why EPF is willing to pay for premium? Are they optimistic about Newco - Sapura Kencana?

Hehe... No idea... But I will not touch it at current prices...