350% GAIN ON THE FIRST DAY ON LISTING! CAN THIS COMPANY’S SHARE PRICE GO HIGHER?

From listing to over 100% in profit, Bioalpha Holdings Berhad’s newly listed BIOHLDG-PA had amazed investors with its stunning share price hike. But deep down what are the reasons that could push the PA’s price so far, are there any potential upsides?

We shall study deeper into the company.

BIOHLDG had recently announced their first quarter’s result for financial year 2021, and I must say the results are outstanding. Investors might be familiar on BIOHLDG suffering losses in the last financial year due to the travel restriction that put huge toll on BIOHLDG. Now, despite there are no uplifts nor vaccine passport is really “useful”, I’m surprised to see that the company managed to turnaround in this quarter.

Based on the explanation notes of the company, the increase of income for the group was mainly due to the China’s deal in Guizhou province – the deal alone had brought in approximately RM15.45 million in revenue, the ODM business for the company had also thrived under the immunity-boosting trend, especially on Ritamix.

Honestly, I’m glad that the company is delivering great results where it actually shuts naysayers up. The cash flow from operating activities also proves that the company is improving on cash management.

Nevertheless, the MCO had also dampened the sentiment for the group’s retail business, but on an overall level, the group still delivered stellar earnings.

Now back to the BIOHLDG-PA.

PA, or WA are financial derivatives that are convertible into the mother share at a certain price. A spike in interest means there might be opportunity for arbitrage in terms of conversion price + costs and between the mother share. So, should you focus on PA, or the mother share?

9/10 investors would’ve picked PA since the price went up by 350%. But again, 90% of investors are actually losing money in the stock market. Ultimately, investors invest in PA due to “believe” in share price appreciation in mother share. And since the share price of BIOHLDG had instead went down as BIOHLDG-PA gone up, which do you think is cheaper?

With such a nice turnaround story from the company, do you think investors would chase after the +350% PA or mother share?

Definitely the mother share in some later time.

Therefore, for investors who are interested in BIOHLDG-PA, it is better or rationally a wiser choice. But I may not affect your investment choices. So, ultimately it was still up to you!

*P/S: My personal TP for BIOHLDG mother share is 35 cents.