Morpheus61,
Of course SC or Bursa approve the issuance, else they can not be listed and traded in Bursa, and every issuance of structured warrant come with document.
Singapore and Hong Kong also have structured warrants, US also have options which is quite similar to structured warrants.
In fact, for those stocks that without structured warrants, you better be careful, may be SC or Bursa do not want to approve it because of not meeting certain criteria.

Morpheus61,

Litigate for what?
I mentioned it very clear in my writing, forget about those structured warrants issued by all other investment banks, look at the structured warrants issued by CIMB only.
Because their market making is the most reasonable, the implied volatility applied by them are not very far away from the historical volatility.
However, their market making sometime is not so efficient or slow, that mean I have opportunity to get it cheap.

Morpheus61,

Please understand the fair value calculation from youtube.

https://www.youtube.com/watch?v=YJls_RgTniw&index=4&list=PL4108D90CA93915EB

Call warrants on HARTA / KOSSAN / SUPERMX / TOPGLOV

https://klse.i3investor.com/blogs/gambler/2020-09-28-story-h1514354178-Call_Warrants_on_HARTA_KOSSAN_SUPERMX_TOPGLOV_My_pick_is_HARTA_C54.jsp

Call warrants on HARTA / KOSSAN / SUPERMX / TOPGLOV

https://klse.i3investor.com/blogs/gambler/2020-09-28-story-h1514354178-Call_Warrants_on_HARTA_KOSSAN_SUPERMX_TOPGLOV_My_pick_is_HARTA_C54.jsp

Call warrants on HARTA / KOSSAN / SUPERMX / TOPGLOV

https://klse.i3investor.com/blogs/gambler/2020-09-28-story-h1514354178-Call_Warrants_on_HARTA_KOSSAN_SUPERMX_TOPGLOV_My_pick_is_HARTA_C54.jsp

My pick is HARTA-C54.

https://klse.i3investor.com/blogs/gambler/2020-09-28-story-h1514354178-Call_Warrants_on_HARTA_KOSSAN_SUPERMX_TOPGLOV_My_pick_is_HARTA_C54.jsp

Correction: .....issued by other investment banks was worth looking at,

Sold all my C52.

Candy3147,

The gearing shown in my spreadsheet is not effective gearing, My gearing = mother share price / CW price / ratio. Effective gearing is lower than that. My spreadsheet can not calculate effective gearing because the calculation is a lot more complicated.

The purpose of effective gearing is to estimate the movement of mother share price versus CW price. Let say the effective gearing is 3, that mean we expect if mother share move 1%, the CW will move 3%.

Your C53 is currently trading at a very expensive price.
You just need to compare it with C60, which both expire on the same date, easier to compare.
C53 exercise price is 23.88 which is much higher than C60's 18.00.
C53 ratio is 50 against C60's 20.
The middle price for C53 is 0.0775 and C60 is 0.08,
Multiply with the ratio, we get:
1) For C53, 50*0.0775=3.875
2) For C60, 20*0.08=1.60

https://www.youtube.com/watch?v=YJls_RgTniw&index=4&list=PL4108D90CA93915EB

https://www.youtube.com/watch?v=0WGDWAF7CGY&t=97s

Watch the above 2 youtube video to have some understanding on binomial model.

Candy3147，

What is CEU that you mention?
HARTA-C53 is also a call warrant.
Now a day, call warrants can not be converted to mother share.
On expiry, the issuer will calculate the mother share average price, minus the exercise price, then divide by exercise ratio, and return the money to you. Of course if the mother share average price is less than the exercise price, then no money.
Warrants is good provided:
1) The mother share is good, and
2) The market price is lower or at least quite close to the fair value.
That mean you must know how to calculate fair value, you can learn from youtube and wiki.
Most companies issue free warrants during right issue, so must make sure that the mother share companies are reasonably good.

https://klse.i3investor.com/blogs/gambler/2020-09-18-story-h1513558281-HARTA_s_Call_Warrants_I_select_HARTA_C52.jsp

Buy HARTA-C52 instead of the mother share.

If the share price is undervalue for long time, I think the boss might take it private, we will lose a good company from Bursa.

The executive director Tan Sik Eek own 333,333 shares, he suppose to come out only 333333*0.08=RM26,667 for the right issue, but he has committed to subscribe excess right up to a total of RM15,000,000 if other shareholders refuse to subscribe.

If he is reluctant to subscribe more, he has to make sure that the right issue is attractive, i.e. the share price must be much higher than RM0.08 during the time when other shareholders are about to make their decision, whether to subscribe or not, probably during one week time before the closing date.

Of course, if he is more than happy to come out with RM15 million, then he does not need to worry about.

Update after today closing,
FINTEC 90 days historical volatility was 122.44%,

Input Interest Rate of 2%, and Dividend Yield of 0%,

We get:
FINTEC-WA Implied Volatility is 72.6%,
FINTEC-WB Implied Volatility is 83.9%,
FINTEC-PA Implied Volatility is 0% or not meaningful as there is no premium.

Average of the above 3 Implied Volatility = 52.17%, input into my spreadsheet, the results:
FINTEC-WA fair value = RM0.0355
FINTEC-WB fair value = RM0.0550
FINTEC-PA fair value = RM0.1241

Update after today closing,
FINTEC 90 days historical volatility was 121.25%,

Input Interest Rate of 2%, and Dividend Yield of 0%,

We get:
FINTEC-WA Implied Volatility is 69.1%,
FINTEC-WB Implied Volatility is 81.8%,
FINTEC-PA Implied Volatility is 0% or not meaningful as there is no premium.

Average of the above 3 Implied Volatility = 50.3%

Input this volatility = 50.3% into my spreadsheet, the results:
FINTEC-WA fair value = RM0.0403
FINTEC-WB fair value = RM0.0642
FINTEC-PA fair value = RM0.1365

rosetan,

This PA does not pay dividend at all.
Where did you get the info/dividend 0.02%?

pineapple123,

I am holding PA and do not want to convert for the time being.

Update after today closing,
FINTEC 90 days historical volatility was 121.06%,

Input Interest Rate of 2%, and Dividend Yield of 0%,

We get:
FINTEC-WA Implied Volatility is 74.4%,
FINTEC-WB Implied Volatility is 89.7%,
FINTEC-PA Implied Volatility is 0% or not meaningful as there is no premium.

Calculate the average = (74.4+89.7+0)/3 = 54.7%

Input this volatility = 54.7% into my spreadsheet, the results:
FINTEC-WA fair value = RM0.0490
FINTEC-WB fair value = RM0.0718
FINTEC-PA fair value = RM0.1439

pineapple123,

chankyew50 is right.

WB+0.15==>1 share,

But for PA, you can choose either:
1) PA+PA==>1 share, or
2) PA+0.08==> 1 share,

I also do not understand they buy WB for what?

If the price could stand a few cents higher than 0.16, people will convert PA by adding 8 cents, then plenty of money coming to the company.

Forget about other assets, consider only the value from FOCUS, and give 50% discount again, FINTEC should worth at least 20% of FOCUS price.

Now FOCUS is 2.33,
Meaning FINTEC should worth at least 0.2*2.33 = 0.46

Base on Friday closing,
FINTEC 90 days historical volatility was 121.46%,

Input Interest Rate of 2%, and Dividend Yield of 0%,

We get:
FINTEC-WA Implied Volatility is 77%,
FINTEC-WB Implied Volatility is 70.6%,
FINTEC-PA Implied Volatility is 0% or not meaningful as there is no premium.

If FINTEC Volatility in the coming years is around 70.6% (Lower of WA and WB Implied Volatility),
Then FINTEC-PA fair value is 0.1346.

When FINTEC was at 0.06, PA was at 0.03,
From there if FINTEC go down 50% to 0.03, PA also go down 50% to 0.015,
From there if FINTEC go up 50% to 0.09, PA also go up 50% to 0.045,

Now FINTEC is at 0.16, PA is at 0.08,
From now if FINTEC go down 50% to 0.08, PA also go down 50% to 0.04,
But, from now if FINTEC go up 50% to 0.24, PA will go up 100% to 0.16.

We should buy PA instead of FINTEC.

Of course, if you are very sure FINTEC will go down, then do not buy at all.

https://klse.i3investor.com/blogs/gambler/2020-08-29-story-h1512602244-FINTEC_prices_at_one_three_six_and_twelve_months_from_now.jsp

Predict future price movement using 200 steps Binomial model.

FOCUS is highly unpredictable.

Look at the last 90 trading day closing prices, the volatility is 77.06%.

If the same volatility maintain from now onward.

Using 200 steps Binomial model, Focus price one year from now could be as following:
1) 6% chance that the price is less than RM0.50,
2) 84% chance that the price is between RM0.50 and RM5.00,
3) 10% chance that the price is higher than RM5.00,

True, most probably FINTEC will not be able sell the whole block of FOCUS shares at RM2.33.
But at what price do you think they can sell the whole block of FOCUS?
RM1.50?
RM1.00?
RM0.50?

FINTEC is a simple company.
It is kind of Closed End Fund, holding a few listed stocks, about 90% of the value come from FOCUS.
So, before you trade FINTEC, ask yourself a question, what is the fair value of FOCUS?

KLK announced on 26th August that they bought 17610 ha planted/plantable land (which 10816 ha planted+6794 ha plantable) in Kalimantan from TSH for USD110.1m, or about 4.2*110.1 = RM462m.

The market price for plantable land in Kalimantan is about RM500 per ha.

Therefore, the price for planted oil palm estate is about
= (462000000 - 500*6794) / 10816 = RM42400 per ha.

CBIP own 13502 ha planted oil palm in Kalimantan,

Assuming the same valuation, it worth = 13502*42400 = RM572m,

CBIP market cap = 492*0.9 = RM443m.

Read the Q1 balance sheet,

Investment securities (Under Non-Current Asset) = 511m,
Investment securities (Under Current Asset) = 24m,

Total Investment securities = 511+24 = 535m,

On 30th June, FOCUS price was only RM0.85. Today it closed at RM2.33.

I updated my spreadsheet just now after closing,
the market value of this investment securities of FINTEC is 1347m.

The next quarter result will be much better.

Total Number of ICPS issued : 899,284,472, it is stated in the annual report.

Get out-standing PA quantity from the latest annual report, and assume since then all the PA conversion was by way of 2 PA to 1 share, then the latest out-standing PA is 358m.

The value of investment securities per FINTEC share was RM1.02 at yesterday closing.

The out-standing:
PA (assume so far conversion by 2 to 1) = 358m
WA = 131m,
WB= 90m,

Assume from now onwards, all PA conversion is by 1PA + 0.08,

The enlarged FINTEC shares = 1958m,

The value of per FINTEC share = (investment securities + conversion money) / 1958m = RM0.763

Updated my spreadsheet with today closing prices.
The market value of its quoted stocks at today closing is 1375m, or RM1.008 per share.
Crazy FOCUS crazy FINTEC.

Keep the PA at least until 10 cents, i.e. 2 cents above the PA conversion price.

FINTEC may need extra cash for FOCUS right issue.

If PA is higher than 10 cents, people will convert it by 1 PA+0.08 cash instead of 2 PA, FINTEC will collect extra cash.

I believe so far all the conversion is by submitting 2 PA.

To determine fair value of the mother share is in another field of study, which I think it is much more subjective, arguable and difficult.

I wish not to get involve in such argument.

Perhaps those investment masters can comment on it.

https://klse.i3investor.com/blogs/gambler/2020-08-23-story-h1512482926-Fair_Value_of_FINTEC_PA_WA_and_WB_at_Different_Volatility.jsp

If FINTEC, WA and WB market prices are fair, then FINTEC-PA is soooooo Cheap.

Updated my spreadsheet with today closing prices.
The market value of its quoted stocks at today closing is 1322m, or RM0.969 per share.

I have updated my spreadsheet,
The market value of its quoted stocks at today closing is 1148m, or RM0.845 per share.

8888_

I really don't know.
Same like I can't understand why FOCUS's price is so high.

8888_

Thank you.

Gunnerman,

I think the one being more manipulated is FOCUS.

https://klse.i3investor.com/blogs/gambler/2020-08-19-story-h1512418784-Is_FINTEC_PA_a_fat_frog_dancing_in_the_street.jsp

Bet on FINTEC-PA

Get the following latest info from the website:
Date: 14th August
Price=1.95
NAV=2.84
KLCI=1564.59

Therefore the CAGR:
For Price = (1.95*1.048/1.03)^(1/14.82)-1= 4.73%
For NAV = (2.84*1.048/0.99)^(1/14.82)-1= 7.71%
For KLCI = (1564.59/911.69)^(1/14.82)-1= 3.71%
For KLCI+3.5%DY=3.71+3.50=7.21%

Let say there were two men wanted to invest 100K on 20th October 2005.
Mr. A bought ICAP and Mr.B bought big blue chips of KLCI.

Now today these two men meet again:
Mr.A investment is now worth 100000*(1+0.0473)^14.82 = RM198,360
Mr.B investment is now worth 100000*(1+0.0721)^14.82 = RM280,600

Mr.B is better off with RM82,000.

But,
Mr.A argue:
I am for for long term investment, I look at the NAV instead of market price, my NAV is 100000*(1+0.0771)^14.82 = RM300,631

Mr.B sarcastically reply:
OK, tomorrow I will sell off all my blue chips and buy ICAP, my NAV will be 280600*300631/198360 = RM425,273.

Hello, NAV is nothing if it can be bought / owned by paying at a much lower price.

https://www.freemalaysiatoday.com/category/nation/2020/08/09/print-more-money-rather-than-borrow-putrajaya-urged/

Print more money rather than borrow, Putrajaya urged.


As at 31st May 2020,

Stocks = 35%
Cash = 65%

If the printing is so much that cause 30% inflation,

Stocks will go up 35%*30%=10.5%,
Cash remain the same,

NAV will go up 10.5% only,

But the KLCI will go up 30%.

No fund should keep so much cash.

JohnDough,

In general, high risk high return, provided you estimate/calculate the risk correctly.

I give an example:

Two house owners wanted to renovate their house, they call contractors to quote.

Let assume all the contractors are experienced, good in cost estimation.

1) House A:
The renovation is indoor, 100% confirm the cost will be 200K.

2) House B:
The renovation is at outdoor, depending on weather condition, the cost could be 50% chance at 150K and 50% chance at 250K, the average is 200K.

I can tell you, that most contractors will quote lower price for House A, say 240K, and higher price for House B, say 260K.

The same apply to stock investment, but as I said the problem is most people calculate the risk wrongly.

Dear Evelyn11,

Come on, did I attack ICAP when I said ICAP perform so so only?

NAV's CAGR was so far 7.78%,
Price's CAGR was so far 4.89%,

Do you know that KLCI's Dividend Yield is around 4% now?
I have no accurate record of KLCI's DY for the previous years,
But I think most of the time the DY should be between 3 to 4%

Therefore, the total CAGR for investing in KLCI's index counters is about 3.73+3.50 = 7.23%,
The difference between 7.78% and 7.23% is just only 0.55%,
Is it very wrong to say "perform so so"?

When I saw ICAP was trading at big discount to its NAV,
I bought it hoping for its liquidation in year 2020,
When I realized that it was not going to happen soon,
I sold them all on 28th May at RM2.07, just enough for break even.

You all can say ICAP is for long term investment, no problem.
If one day, the discount is growing even bigger,
I may buy it again for speculation.

How to compare ICAP’s NAV, Price with KLCI.

On 20th Oct 2005 (from its website)
NAV = 0.99
Price = 1.03
KLCI = 911.69

On 5th August 2020
NAV = 2.86
Price = 1.99
KLCI = 1568.13

ICAP dividend:
Amount = 0.095, subject to 25% tax
Payment Date: 7th Oct 2013
ICAP Price on 11th Oct 2013 = 2.33 (from its website)

Assume reinvesting the dividend for extra units,
Also assume the investor income tax rate is zero, meaning the 25% tax will be returned
Total holding will increase by 0.095/2.33 = 4.08%,

From 20th Oct 2005 to 5th Aug 2020, that is 14.79 years.

Now we calculate the Compound Annual Growth Rate:
For NAV = (2.86*1.048/0.99)^(1/14.79)-1= 7.78%
For Price = (1.99*1.048/1.03)^(1/14.79)-1= 4.89%
For KLCI = (1568.13/911.69)^(1/14.79)-1= 3.73%

However, if we invest into KLCI’s 30 index counters, we receive dividend.
So, I think ICAP so far perform so so only.

Treasury shares:
1) Cancel:
It means the company is healthy, not short of cash.
2) Give to Shareholder:
It is kind of mini bonus issue, wasting administration work, creating odd lot, I don't like.
3) Sell back to market:
It is kind of private placement, get additional cash for development.