There was a very good news for me this evening, I thought earlier that TENAGA's dividend would be ex-dated in May, but it announced just now that it would be ex-dated in April. This affect the fair value of FKLI Spread Apr / Jun, revision as follows:


1) FKLI Spread Apr / Jun's Fair Value is 0.5 points, if Maybank's 32 sen dividend would to be ex-dated in May.

2) FKLI Spread Apr / Jun's Fair Value is -5.8 points, if Maybank's 32 sen dividend would to be ex-dated in April.

1) Money is no longer important, already have more than enough.
2) Just want to help people, so that they will not become water fish in Bursa.
3) But free service will not be appreciated, they may just subscribe but don't read at all.

So how?

Make it simple, work together with some charity organisations, the subscribers just donate the fees monthly to any of the chosen charity organisations, the sifu would be updated.

Dun tell me that the BOD / management do not know the bad effect of extreme low dividend payout ratio? And yet they go ahead to with it, so what is their objective? They can't just be that stupid, right?

Sold them this morning to take profit, sold too early at 3.5 point.

Hope the major shareholder will not fail to support the price around 0.90. If he really fail to support and trigger the margin call / force selling, then sad to say may be the price will go down further.

Let us look at the last trading day of the years 2015, 2016 and 2017 for MALAKOF.

Last day 2015: RM1.60 down 2 sen.
Last day 2016: RM1.37 no change.
Last day 2017: RM0.98 up 9 sen, (price up so much only at the late hour of trading)

My guess on the above is the major shareholder could not afford to let its share price drop further, the reason could be he pledged his shares for loan, and about to trigger margin call.

And we see the company actively carry out share buy back, again it could be the major shareholder's instruction to the management to do so.

So, I believe MALAKOF share price will not go down further.

Anyway, trade at your own risk.

MALAKOF should be a very safe investment.

Whether TNB take off electricity or not from MALAKOF power stations, MALAKOF will still receive money from TNB.

What we need to worry is the impact of interest rate hike.

kcwong98

https://klse.i3investor.com/blogs/gambler/143371.jsp

https://omightycap.wordpress.com/market-data/

Malaysia, PE:18.60 Price/Book:1.70 DY:3.00
Singapore, PE:11.00 Price/Book:1.20 DY:3.10

And yet the interest rate in Singapore is much lower than Malaysia.

1a) By its name, binomial means split from one to two, you look at the calculator provided by Bursa, there is another method called trinomial, which will split from one to three. Come back to my binomial method, at step #01, there are 2 boxes, up and down, the next step, the upper box will split into top box and middle box, the lower box will split into middle box and bottom box, so total 3 boxes.

1b) Why only 12 steps? Because if there are too many steps, I can't view the whole thing in one page. I have tried for many different cases and comparing the results with Bursa calculator, the difference is very minimal. So I am happy with 12 steps, after all fair value calculation is kind of estimation, no such thing of very accurate, the movement of mother shares is also depend on market players (human behavior)

2) https://www.youtube.com/watch?v=YJls_RgTniw&index=4&list=PL4108D90CA93915EB
Watch the above youtube repeat and repeat, until you understand the calculation method. Pay attention to the video at 2:27 when the pointer at cell F8 (i.e. 1.008), you can see the formula of =EXP((C9-C10)*C7). From this formula, you can understand the binomial calculation.

https://en.wikipedia.org/wiki/Implied_volatility

They are better in explaining IV.

1) Green ~ Mother Share Price at various steps. Blue ~ The probability of them.

2a) AC = Z - Strike ( or exercise price), if AC greater than Strike, or else zero.
2b) AD = AA * AC.

3) u=EXP(B7*B11^0.5), d=EXP(-B7*B11^0.5), a=EXP((B8-B10)*B11), p=(E4-E3)/(E2-E3).

4a) The 8% is for example only, not for GENTING-WA case.
4b) Let me try to explain in another way. Say there is one mother share XYZ = 5.00 and warrant XYZ-WA=1.23, so you get a calculator and key in all other required parameters first except volatility, now you trial and error key in volatility until you get the fair value is 1.23 (equal to market price), say the volatility at the time you get fair value = 1.23 is 15.64%, then 15.64% is the IV.

You can see from the Bursa Calculator, the results from Binomial and Black and Scholes are more or less the same.

However, you can see from my excel spreadsheet, it gives some other information:

1) Look at column AA and AC, my chance of total loss is about 15%.

When the interest (price+dividend, meaning we expect the mother share to perform good) go up, the fair value will increase.

Actually, we need to input the future volatility into the calculation, but we don't know the future volatility, so we go back to historical volatility and from there we make a guess for the future volatility.

IV is different thing, we need to input the current market price of the warrant into calculation so that we can get the IV.

As I said before, the IV is the future volatility that will make the current market price of warrant equal to the fair value.

For calculating IV, don't use the calculator provided by Bursa, I found a few time that it gave wrong answer, please google and download from other website.

My excel spreadsheet won't be able to calculate IV directly, unless I trial and error to key in volatility until the fair value equal to market price, then that volatility is the IV.

So, what is the use of IV?

We can use it to compare with the historical volatility,

If IV > HV, the warrant is possibly expensive,
If IV < HV, the warrant is possibly cheap.

Intrinsic Value of 1.66 is relevant if we want to convert GENTING-WA to mother share, and also it will make us feel comfortable. I still look for the fair value instead of intrinsic value.

That 17.59% is the historical volatility.

How I get?

I take the last
Day 1 to Day 30, V=21.9%
Day 1 to Day 60, V=23.2%
Day 1 to Day 90, V=19.7%
Day 31 to Day 120, V=15.3%
Day 61 to day 150, V=13.5%

Then I remove the max 23.2%, take average from the remaining 4 values, and get 17.59%.

Implied Volatility (IV) is not applicable because the GENTING-WA is trading at discount.

The meaning of IV can be explained as follow:

Let say the IV is 8%, meaning if the future volatility of GENTING is equal to this 8%, the current market price of GENTING-WA is equal to the fair value.

In binomial calculation, the interest rate is actually the return of the mother share, meaning I am assuming GENTING share holder will get 6% (price change + dividend) per year.

OK, It is good to have a very bullish market.

From my computation, the target KLCI is 1859 against the KLCI of 1818, or only another 2.3% upside.

However, I go into target prices for the individual index stocks, I find GENTING and TENAGA have the highest upside potential, i.e. 17% and 14% respectively.

And my fair value calculation on GENTING-WA show that GENTING-WA is the much better choice than GENTING mother share. (see my another post on GENTING-WA https://klse.i3investor.com/blogs/gambler/143371.jsp )

So, my preparation for the coming volatile market around GE14 is done, with GENTING-WA in collection.

https://klse.i3investor.com/blogs/gambler/143371.jsp

https://klse.i3investor.com/blogs/gambler/143371.jsp

Jaya Tiasa

Market Cap = 968m*1.12 = 1084m,

Total Liabilities = 1377m,

Current Assets = 332m,

Enterprise Value (EV) = 1084m + 1377m - 332m = 2129m,

Total Planted Area = 69589 ha, (63838 ha matured),

EV per Planted Area = 2129m / 69589 = RM30600 / ha,

Is it very cheap for oil palm estate in Sarawak?

Can the boss be trusted?

The EWM is tracking MSCI Malaysia Index, I assume it is quite close to FBMKLCI.

Look at the chart provided by you, I checked Yahoo Finance, the low point was 31.77 on 26th October.

Let us compare between 26th October and 8th December.

26th October: EWM=31.77, USD/MYR=4.235, FBMKLCI=1737

8th December: EWM=32.90, USD/MYR=4.090, FBMKLCI=1721

So, in term of RM, EWM has gained 32.90*4.090/31.77/4.235-1=0.01%

For FBMKLCI, there were some dividend ex-dated in the same period, equal to about 7 points.

So, FMBKLCI's gain in the same period was (1721+7)/1737-1=-0.52%

The difference was 0.53% only.

As MSCI Malaysia Index and FBMKLCI are not exactly the same, so 0.53% is possible.

I understand that ETF managers has to do market making, so the ETF price will not differ much from their NAV.

我的这个计算，假设6月FKLI的合理价等于市价，就得到了KLCI的回酬率是每年2.7%。

看1月FKLI的合理价高过12月FKLI的合理价共约4点，4*365/31/1721=2.7%。

Two more things to know:

1) The Ladang Tuan Mee Sungai Buloh of 1488 ha worth a lot of money.
2) For long term investment, the parent company BKAWAN is so much cheaper.

For retiree, the investment should be simple.

Instead of investing in unit trust, a combination of FKLI and EPF will give better return.

Both Mr A and Mr B have RM885K in EPF
Mr A take out all RM885K and invest in unit trust that quite close to track KLCI.
Mr B take out only 10% or RM88K, open a future account and buy/long 10 contracts of FKLI expiring on 31.12.2017 at market price of 1767.
So both of them are exposed to same risk and opportunity.
What will happen on 31.12.2017?
Let assume KLCI will go up 4% per year, and EPF’s dividend is also 4%.
Meaning KLCI will go up around 1% from today’s 1771 to 1789 on 31.12.2017.

What Mr A get?
1) 1% capital gain or RM8850,
2) Dividend of 1.02% or RM9027,
Total of RM17877.

What Mr B get?
1) Profit from FKLI = 10*50*(1789-1767) = RM11000
2) EPF Dividend of 1% = (885K-88K)*0.01 = RM7970,
Total of RM18970.

So Mr B will be better off.

1) Assuming there will be 4*3 sen dividend ex-dated before expiry of WA, and divide it by the duration from now to expiry, to get the Dividend Yield.

2) Historical Volatility of 10.7%, for the last 90 trading days.

3) Risk Free Interest Rate of 6%, take note that in calculation of WA fair value, it is assuming the return of mother share is equal to this Risk Free Interest Rate.

With the above input, WA fair value is 3.4 sen, only about 10% of the market price of 34.5 sen.

How come the fair value of WA is so much lower than its market price?

Why people want to buy WA at a market price of 10 time higher of its fair value?

Are these people idiot?

No, no, no, they are not idiots.

Just that they have high confidence in CBIP's future performance.

What we can do is, trial and error the Risk Free Interest Rate until the fair value become equal to market price of 34.5 sen.

What I get is, Risk Free Interest Rate of 21.5% will make the fair value become 34.5 sen.

Wow, annual return of 21.5%!

With this result of calculation, I bought some CBIP this morning.

Invest at your own risk.

hng33,

I refer to the 4Q presentation document page 4, it said the log extraction quota for July 2017 is 65000 cu.m, and for August 2017 until June 2018 is 51400 cu.m per month.

But then why the actual extraction for July 2017 was only 14162 cu.m and for August 2017 was only 35965? Very much lower than the quota.

18.5m GENTING new shares from WA conversion is listing today, probably they will sell mother and buy WA, and therefore the discount will be reduced.

1) Assuming two more dividend payment before expiry of WA, i.e. 6 sen in June and 8.5 sen in Sept 2018, and divide it by the duration from now to expiry, to get the Dividend Yield.

2) Historical Volatility of 14.4%, for the last 90 trading days, please take note that the General Election must be carried out before WA expiry, therefore most probably Volatility of all stocks will be much higher for the coming months, and so using the historical volatility of 14.4% is in fact already underestimate.

3) Risk Free Interest Rate of 6%, take note that in calculation of WA fair value, it is assuming the return of mother share is equal to this Risk Free Interest Rate.

With the above input, WA fair value is RM2.41.

Anyway, if you are really not comfortable, and insist that the Risk Free Interest Rate must not be that high, must die die to input 4%, then I change it to 4% and calculate again, the WA fair value now reduced to RM2.23.

1) If the project is so lucrative,
a) Why the earlier partners pulled out?
b) Why they could not find other partners soon after that?

2) Now the project has been delayed for a few years,
a) Will the 25 years PPA automatically shorten to maintain the Handover date?
b) As the delay cause trouble to the Vietnam power supply planning, any penalty?

This project has so much doubt, I think it is quite high risk, worth only if the return is estimated better than others.

Say Soy Oil is at 35cents/lb, that is around RM3300 per mt.

But historically Palm Oil is trading at average 15% discount from soy oil, so palm oil fair price should be RM2800.

Why is palm oil trading at 15% discount? Malaysia and Indonesia did not do enough marketing / promotion? I don't know the answer.

Is soy oil cheap at 35 cents/lb? Yes, last time soy oil price has ever gone up to higher than 50 cents/lb.

But then, that time the crude oil price was much higher, and people in the advanced countries, they use a lot of machinery in plantation, the cost of production was higher due to high crude oil price.

He said the market cap of JAKS is small, the IPP project therefore is very significant to the company.

But is it really true?

Let us compare JAKS with MALAKOF.

For MALAKOF:
Market cap is 1.13*5000M = 5650M
Total effective MW = 7,036MW, wirh various remaining years of generation.
Total remaining MW*Year = 87,205 MW*Year

For JAKS:
Market Cap is 1.33*482 = 641M
Total effective MW = 40% of 1200MW = 480MW, with 25 years of generation.
Total remaining MW*Year = 480MW*25Year = 12,000 MW*Year.

Now we divide the MW*Year by Market cap,
For MALAKOF, it is 87,205 / 5650M = 15.43MW*Year per million Market Cap.
For JAKS, it is 12,000 / 641M = 18.72MW*Year per million Market Cap.

So comparing 15.43 with 18.72, not really so much difference, we might as well invest in MALAKOF.

I do not have MALAKOF or JAKS at the moment.

https://www.christopherleeong.com/media/2625/161214-guide-to-takeovers-in-malaysia.pdf

Refer page 8/9 of 31.

(3) Mandatory Offers
As the name suggests, a mandatory offer is one which a bidder is compelled to make by law. A bidder triggers the obligation to extend a mandatory offer to acquire all the shares of the Target which he or persons acting in concert with him do not, already own if the bidder, together with persons acting in concert with him:

(a) acquires more than 33% of a company (i.e. obtains control);

(b) triggers the ‘creeping threshold’ (holds between 33% and 50% of the voting shares or voting rights, and acquires more than 2% of the voting shares or voting rights in any period of 6 months); or

(c) acquires between 20% and 33% of the target's voting shares and the SC exercises its discretion to trigger the mandatory general offer requirements.



ITEM (C): SC COULD EXERCISE ITS DISCRETION.

tksw,

The maximum kWh = 1200*1000*365*24 = 10.5 billion kWh, but then there must be some scheduled shutdown, the document stated 7.5 billion kWh per year, about 71%.

From what I know, for the typical Power Purchase Agreement (PPA) in Malaysia, the power purchaser will determine how much kWh they withdraw from the plant, but the seller is still entitle to get a fixed amount as long as the plant is ready / standby to generate most of the time (in term of how many % of the time).

1) I looked thru the announcements, could not find the evidence that JAKS will be receiving the said 400M during construction phase. Can anybody help to confirm? I might have missed it somewhere.

2) The project cost of USD1900M for 1200MW, that is USD1.58M per MW. My university course mate who work with Tenaga for around 30 years told me that the normal construction cost per MW should be around USD1.0M to USD1.5M per MW. So USD1.58M per MW is at high side? Or construction cost in Vietnam is naturally higher?

3) KYY's shares are parked at various nominee accounts, I don't know but guess that these shares were bought by margin funds. If the price of JAKS keep dropping further, there will be force selling at what price? Once force selling is triggered, the domino effect is scaring?

4) It was mentioned in the documents that the 1200MW plant will generate 7.5 billion kWh per year. But I don't know the profit margin, i.e. how much per kWh. Let say making 5 sen profit per kWh, and 40% of it go to JAKS, that is 150M per year, or 31 sen EPS for JAKS. But the question is, I don't know the terms in the Power Purchase Agreement.

If US attack N.Korea, at least 1 million S.Korean will die, US will be cursed by the whole world including their own people.

magnus, why should I sell? I am holding GENTING-WA instead of GENTING, it is a managed risk.

As I said, they might not to the extent of closing down the casino. But they can give all sorts of trouble to GENTING if they get into power, e.g. close on Thursday night so that everybody have more time to make love as encouraged by them, close during fasting month, additional taxes and etc.

After all, GENTING-WA is trading at discount, no advantage to buy GENTING instead of GENTING-WA.

Stocks in general will experience high volatility across the election time. The reason is simple, there would be some uncertainty. Gambling stocks will have even higher volatility than others.

So I would suggest GENTING price is now depressed as some investors don't want to take the risk, we would never know what will happen to GENTING if PAS win the Pahang state, the chance will be slim but who know? They might not go to the extent of closing down the casino but certainly there would be a lot of restriction.

So for save measure, buy GENTING-WA instead of the mother share. Instead of put in 9.75 to buy mother share, it would be better to buy GENTING-WA at 1.75 and put the balance 8.00 in bank.

When the election result come out and favourable to businesses, stocks in general will go up and GENTING will go up even much more relatively because its price was depressed before the election.

If it happen unlikely that the election result is bad for businesses, GENTING might go down below the exercise price of GENTING-WA of 7.96, then you still can take out your 8.00 from bank and buy cheap GENTING if you want to, or just forget about it.

Your loss will be less compare to if you had bought GENTING before the election.

The 6.58 eps is base on 1.7 billion shares before IPO, the total number of shares after IPO is around 2.3 billion shares, if not mistaken?

http://www.businessinsider.com/17-equations-that-changed-the-world-2014-3/?IR=T&r=MY

The method of calculating option fair value is one of the 17 formulas that changed the course of history.

It is not a talk kok method or nonsense.

magus, I do not consider that one off dividend in GENTING-WA fair value calculation.

Input required:
1) Expected mother share average future return per year, assume 6.00%.
2) Assume mother share future volatility will be the same as the last 90 trading days historical volatility, i.e. 18.52%.
3) Assume no change to dividend payment.
4) Expiry, use 18/09/2018 instead of 18/12/2018.

Use any option calculator available online, the fair value of GENTING-WA is RM2.13.

HOLLAN5222, The power purchase agreement (PPA) feature fuel cost pass-through, meaning TNB is the one bear the risk of rising fuel cost.

Anyway, when TNB suffer high cost of fuel, they will ask the government to increase the electricity tariffs, at the end all Malaysian pay more for electricity.

GENTING's volatility is higher compared with other blue chips because some big funds can not buy GENTING due to their own rules. You can see these big funds everyday buy and sell those blue chips.

If GENTING SG is Good, then GENTING is better and GENTING-WA is the best.

look things from another angle.

The current prices:
CBIP=2.11,
CBIP-WA=0.40, assume this 0.40 is not due to people goreng, or else meaningless, no need to read further my following writing.

Find the volatility of CBIP from the past 90 trading days, it was 16%, then assume CBIP's volatility will remain the same in future.

Get or use any option calculator available online (For me, I have made my own calculator using spreadsheet), key in all the input required:

1) Exercise price: 2.40
2) Volatility: 16%
3) Maturity: 06.11.2019
4) Interest: Trial and Error until the calculator show CBIP-WA's fair value is 0.40.

I get the Interest=17%.

In the calculation of fair value, the "Interest" is actually the predicted future return (price + dividend) for the underlying. In this case, meaning the market expect or predict CBIP would probably give 17% return per year to its shareholders.

What can we do with this out put of the calculation:

1) If we think the market prediction may not be right, the return for CBIP is not likely to give that high of 17%, but probably will still give reasonable good return, then buy CBIP.

2) If we think CBIP most probably could give more than 17% return per year, then buy CBIP-WA.

3) If we think CBIP will not give satisfactory return in future, then forget about both CBIP and CBIP-WA.

@Alex,

Their annual reports and also the company website.

http://www.cbip.com.my/main/index.php/investor-relations/investor-presentation

The major contribution to future earning of CBIP will be from the plantation in Indonesia, they have 32000 ha land in Indonesia, 9717 ha was already planted as at 31st March 2017. Last year they planted 2039 ha, and the 1st quarter this year they have planted 318 ha, again I believe they will achieve their target of 2000 ha per year.

Is planting 2000 ha per year very aggressive? I think so.

Make comparison with another plantation company that still have a lot of land in Indonesia, GENP has planted only 1649 ha last year.

If we take into consideration the size of the company.
For GENP, 1649 ha / 8850 million market cap, that is 0.19 ha/million market cap.
For CBIP, 2039 ha / 1100 million market cap, that is 1.85 ha/million market cap.

May be there is also other company that is very aggressive in planting which I do not know, please highlight.

So, CBIP will be busy planting 2000 ha per year for the next 10 years, no problem on future earning growth.

Please read the report page 27 about the manager fee, ".... dikira dan diakru secara harian....". So your estimation on NAV could be very far away from the actual number because the market (and NAV) went up and down during the year.