PANTECH-WA Stock Chart as at 16-08-2013

Dear valued members, 

You should be realistic about your goals. 

"In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten." Peter Lynch 

Disclaimer: Please be informed that the following mentioned stocks / symbols are solely for the purpose of education only; it is neither a trading advice nor an invitation to trade. For trading advice, please speak to your dealer representative or remisier or financial adviser. Please buy at your own risk. Final decision is yours. 

The second stock I wish to select for second half of 2013 is Pantech-WA. 

My trading plan 
This stock is an up trending stock (daily, weekly and monthly chart). 
The stock price was hitting all times high at 0.72 on 19/7/2013. Currently, the price goes through a correction and closed at 0.62 on 1/8/2013. 

Major resistance is 0.72. 
Major support is 0.575 and 0.54. 
Target price = 0.90 
Margin of safety = 31% 
Potential profit gain = 45% 
Cut loss at 0.525 = 15% 
Risk reward ratio at 0.525 cut loss = 1 : 2.9 
Target price recommended by RHB is 1.43 (Pantech), Pantech-WA is 1.00. 

Technical Chart. 
A very nice up trending stock formed. There will be a good chance to hit our target price if the major resistance at 0.72 is crossed. 

Conclusion 
Recommend to buy at 0.62 on 1/8/2013. 

Intrinsic Value calculation had been done before in this forum, I will copy and paste it here later.

Posted by Ooi Teik Bee at Aug 2, 2013 10:31 AM

Dear valued members, 

This calculation was done when the mother share Pantech was at 0.95 and WA was at 0.49. 

Pantech IV Calculation

Total Net Profit Years 7/7
Total Positive Operating Cash flow Years 5/7
Total Dividend Payout Years 6/7
Total Positive free Cash flow Year 4/7
22/28

Growth%
7 Years Average Turn Over 317,987
Latest 4 quarters 637,160 100.37%

7 Years Average Net Profit 36,382
Latest 4 quarters 55,003 51.18%
 

Price CAGR % (Buy and Hold)
Average Return History 6.28%
3 yrs Return 15.43%

Method 1
EPS 0.12
g 7.72
Y 7.0
IV= (EPS*(8.5+1.5g)*4.4)/Y 1.50
Current price 0.95
Margin of Safety 36.59%
Potential gain 57.70%

Method 2
Discounted Cash Flows Calculator
Discount rate 12.00%
EPS 0.12
Earning expected to grow (annually) 7.7
for the next (? Years) 3.0
before leveling off to an annual growth 3.00
Calculate Stock Value per share 1.55
Current price 0.95
Margin of Safety 38.71%
Potential gain 63.16%


Method 3
ROE 14.60%
Rr 8.00%
NTA 0.74
IV= ROE/ Rr*NTA =1.35
Current Price 0.95
Margin of Safety 29.66%
Potential gain 42.16%

Method 4
(22.5*EPS*Book value per share)^0.5
EPS 0.1187
Total equity 376747
Number of shares 516167
(22.5*EPS*Total Equity/share)^0.5 = 1.40
Current price 0.95
Margin of Safety 31.96%
Potential gain 46.97%

Warrant

Pantech-WA
Expiration date 2020
Exercise price 0.60
Price of Mother share (Pantech) 0.95
Intrinsic value of WC 0.32
Actual price of WC 0.49
Premium or Discount 14.74
Gearing 1.94

Conclusion
If the price of Pantech is 1.35, the price of Pantech-WA should be (1.35 - 0.60) = 0.75. 
If it is trading at 20% premium, the price of Pantech-WA should be (0.75*1.2) = 0.90. 
Potential gain = (0.90 - 0.49)/0.49*100 = 84%.

Thank you. 
Ooi

Posted by Ooi Teik Bee at Aug 2, 2013 10:34 AM

Re: How to calculate premium of warrant 
Dear valued members, 

I believe the method to calculate intrinsic value of Warrant is very complicated, I suggest we do it in a practical and easy way so that everyone can use it effectively. 

Premium = ((Current Warrant price + Exercise price)/ mother share price - 1)*100% 

e.g 1 - Pantech-WA 
Closing price on 14/6/2013. 
Pantech-WA = 0.485, Mother share (Pantech) = 0.925 
Exercise price = 0.60, Expiration date = 2020 

Premium = ((0.485+0.60)/0.925-1)*100% = 17.29% 

Expiration date is > 1 year, premium <= 20% is acceptable according to current KLSE quotation (practical approach). 
Hence buying Pantech-WA at 0.485 is considered to be a good buy (17.29% premium). 
Pantech-WA should be 0.51 if it is trading at 20% premium. Any price < 0.51 is considered as a good buy. 

e.g 2 - Puncak-WB 
Closing price on 26/7/2013. 
Puncak-WB = 1.66, Mother share (Puncak) = 2.45 
Exercise price = 1.00, Expiration date = 2018 

Premium = ((1.66+1.00)/2.45-1)*100% = 8.57% 

Expiration date is > 2 year, premium <= 20% is acceptable according to current KLSE quotation (practical approach). 
Hence buying Puncak-WB at 1.66 is considered to be a good buy (8.57% premium). 
Puncak-WB should be 1.94 if it is trading at 20% premium. Any price < 1.94 is considered as a good buy. 

Note 
If expiration date is < 1 year, premium paid should be <= 10%. Please take note. 

I hope all members can make full use of these examples to improve your knowledge and skill. You must practise a few times in order to be good. 

Thank you. 
Ooi