Hevea, Time to Alight 亿维雅，是时候下车了！
HEVEA : a broken gem 破碎的宝石
For the past 2 weeks (before yesterday's announcement of Q2 Result), both Hevea and Hevea-WB were under immense selling pressure. Have you ever wonder why such a perceived to be a good stock went through this selling gyrations?
Of course, outside investors like you and me are not priviledged to the inside informations of Hevea. But the tell talle signs were all over the movement of both Hevea and its WB of late.
Learned investors surely know and understand the co-relationship between a mother share and its derivative "son" or the warrant. In all market dynamics, the warrant will always trade at a premium or "out-of-the-money" to its mother shares because of its inherent elasticity. It is this elasticity or leveraging power that attracted investors' enthusiasm, and they are willing to pay a premium for it while at the same time forgoing all dividends that only the mother shares are entitled for.
However, this conventional nature of warrant-premium-over-mother-shares are now broken by Hevea-WB in the last two weeks. As a matter of fact, it still happened today where Hevea shares price closed at $1.16 and WB at $0.895 respectively (conversion ratio 1:1 at a cash tender of RM 0.25 for every new Hevea shares).
Why and what happened?
The answer lies on the non-disclosure to the public on the movement of the shareholdings of the directors and substantial shareholders of Heveaboard Berhad. You may say if that is the case, these interested parties (Directors and Substantial Shareholders of Heveaboard Berhad) may have violated the Bursa Malaysia listing requirements by so doing.
Yes and No, as under the prevailing Bursa Malaysia listing requirements, no disclosure is necessary if it only involves changes in the derivative shareholdings of a listed entity (Hevea-WB in this case). In a plain word, these interested parties need not give a damn to you and me as well as the market regulators to what they do to their Hevea-WB.
This bring us back to why the selling gyration on Hevea and Hevea-WB of late. If you look at the Annual Report 2015 of Heveaboard Berhad, the top two single largest warrant holders of Hevea were both Heveawood Industries Sdn. Bhd. with 32,047,710 and 19,217,240 units repectively or a combined warrant holdings of 42.74% of Hevea-WB.
I have written in the beginning of the year many articles on Heveaboard Berhad and Heveawood Industries Sdn. Bhd. and the shareholders feud in the latter. I can confirm now that all the 42.74% of Hevea-WB have been "disbanded" by Heveawood Industries Sdn. Bhd. and are now gushing out at the gate of Bursa market, ready to be sold off to the public.
This 42.74% or 51,264,950 Hevea-WB selling in the open market for at least the last two weeks explained why the trading volume of Hevea-WB was always bigger than Hevea in this period. When the selling get intensified, the co-relationship between the mother shares and its son come into play, and inadvertantly dragged down Hevea shares price.
Until all these 51,264,950 Hevea-WB finds permanent homes, both Hevea and WB shares price will be under tremendous selling pressure in the medium term. And this has just been aggravated by the not so pleasing Q2 Result of Heveaboard Berhad.
The perceived gem has just been shattered.
PS : I will write again on the 'dark box' of Hevea soon.
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Discussions
Be the first to like this. Showing 29 of 29 comments
very funny, so the owner is going to sell off everything they have & let go this company?
Sound like YTL & Sons Sdn Bhd selling all its shares in YTL Corp.
2016-08-25 00:15
"In all market dynamics, the warrant will always trade at a premium or "out-of-the-money" to its mother shares because of its inherent elasticity. It is this elasticity or leveraging power that attracted investors' enthusiasm, and they are willing to pay a premium for it while at the same time forgoing all dividends that only the mother shares are entitled for."
What kind of statement is the above,
1) trading at a premium is termed "out-of-the-money"???
2) That warrant must be traded at a premium while at the same time forgoing all dividends?
Hevea warrant, at 89.5 sen, with a conversion price of 25 sen, is deep-in-the-money. It is nonsense to refer it as "out-of-the-money" if a warrant is traded at a premium. In-the-money or out-of-the-money of derivative depends on the underlying share price and warrant's exercise price, and it has nothing to do with premium.
underlying share price > exercise price is in-the-money
underlying share price < exercise price is out-of-the-money
for the deep-in-the-money warrant, which Hevea wb is, there is little time value as most of the value depends on the intrinsic value of the warrant. Hence Wb may not be necessary to trade at a premium, especially the gearing is not much. In fact, warrant is often traded at a discount when there is an impending dividend, which erodes the value of the warrant.
"And this has just been aggravated by the not so pleasing Q2 Result of Heveaboard Berhad."
Tell us, what is "not so pleasing Q2 Results"? Please elaborate.
2016-08-25 00:51
It is a no brainer to convert wb to mother with increasing dividend qoq and it will continue with the increase cashpile. I seriously don't understand the logic of this article.
2016-08-25 01:00
Hey look who's back. Broken gem is it? If it is broken directors wouldn't be spending money to convert their warrants to mother shares, would they? Past 2 days saw conversion of 2.7m warrants by a director, which at a conversion price of 25 cents, would have cost him RM675k. With the warrants expiring in 2020, which is a long time away, the conversion suggests that Hevea is soon to become a generous dividend stock. Uncle, please learn how to write short seller report lah. Your report got no teeth.
2016-08-25 06:03
I do not agree with you. You write well but your intentions are insidious and therefore bias and untruthful. Only novices will be taken in by what you wrote.
2016-08-25 06:55
[The answer lies on the non-disclosure to the public on the movement of the shareholdings of the directors and substantial shareholders of Heveaboard Berhad. You may say if that is the case, these interested parties (Directors and Substantial Shareholders of Heveaboard Berhad) may have violated the Bursa Malaysia listing requirements by so doing.]
FIRE IN THE HOLE, go go go... Please write a letter to bursa and sue the directors! O Kong(fine) these people 99!!!
come on, what's your intention to write here? not all investors read i3 articles, many don't come i3, many read newspapers and your "kind-hearted" advice do not help everyone~~ go and report at KOSMO la~ that newspaper style sama sama you...they will be willing to help if you lick their butts...
2016-08-25 07:18
soojinhou Hey look who's back. Broken gem is it? If it is broken directors wouldn't be spending money to convert their warrants to mother shares, would they? Past 2 days saw conversion of 2.7m warrants by a director, which at a conversion price of 25 cents, would have cost him RM675k. With the warrants expiring in 2020, which is a long time away, the conversion suggests that Hevea is soon to become a generous dividend stock. Uncle, please learn how to write short seller report lah. Your report got no teeth.
25/08/2016 06:03
\
jinhou, i think he would to say, director converted warrant because he wanted to earn that 0.5c premium... wah~~ got 10k++ leh~~
2016-08-25 07:21
kc chong, I thought sometime ago a forummer have teached you on what is "out-of-the-money" scenario....LOL
2016-08-25 08:31
Q2 results are not the best, but good enough to prove the company is doing alright. Furthermore, I don't see warrant part a big issue since it's more or less leaning to positive rather than negative issue.
2016-08-25 09:01
Yes, cannot expect a company be good every quarter. Inari, Latitude, Flbhd all experience up and down. Are you saying these are not good companies?
2016-08-25 10:32
yawn.. another lie which proved to be wrong like all the rubbish post early this year
2016-08-25 15:03
This 42.74% or 51,264,950 Hevea-WB selling in the open market for at least the last two weeks explained why the trading volume of Hevea-WB was always bigger than Hevea in this period.
I have been observing the volume and I find that the above statement is not true most of the time. For instanse, you and me can check the mother volume is extremely higher than the child today. Pls take note that somebody lies.
2016-08-25 15:20
@Beza, sorry I'm not understand what is the relation of big volume of -WB with the mother price? can you explain in more detail? thanks!
2016-08-26 10:17
wan7075, Hevea-WB quantity volume selling is not more than it mother share volume during the past two weeks in the open market and even not achieved quantity volume of 10% of it total existing warrant, it meant this joker, robert created fake story again
2016-08-26 14:42
Kena tipu liao..I q at 0.80 for 3 weeks liao...expiring soon...aiyor..kena req again...Haiya....
2016-08-26 15:37
this idiot assume he can hide behind his keyboard and create any fake story as he like. he didn't know his IP has been tracked. his identity can be revealed easily with that. with so many government linked funds as major share holders in Hevea, i am sure that these funds won't not let it go easily if they find out someone is sabotaging their portfolio. if usual reader report this to Bursa, don't think any action will be taken. but if any vip in this fund make a phone call to some vip in relevant authority, this idiot will be in deep trouble. I heard some big boy are watching him now and i wish him good luck
2016-08-26 15:50
Sometimes it takes lots of courage and patience to be contrarian. But then both sides strongly believe they are the one with second level thinking, hence, their decision and judgment are correct. Therefore, they make the buy or sell decision. It is time when there are extreme contradictory views that created the deep undervalue or overvalue situation. It is not this month or next month that will prove who has the right judgment. I personally think we should at least give 1 -2 years to review whether which view is right for the decision made today.
2016-08-27 14:18
The company is now in such a strong financial position compared to many years ago. Obviously the early investors has reaped good profit as the share price has multiplied many folds.
Of course we are investing for the future, so will it grow stronger or now is already the peak of furniture industry and it will start to make U turn? Its a million dollar question!
Even when there is slowdown/challenges in the industry, are we assuming that management is not aware of it and do nothing about it? Nothing is static and company evolves when industry cycle changes. The track record shown by the management so far provides more confidence than fear to me.
I agree with the writer that Hevea is a gem, but could not agree on the part it is “broken” as there is nothing to indicate that. Hopefully, we shall review in 2 years from now.
2016-08-27 14:21
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Please talk bad and sell all your HEVEA shares so we can collect it cheaply.
Thank you.
CFTrader.
2016-08-25 00:15