Bear in mind, the special dividend of RM85.36mil will be in form of cash and dividend in specie. The key points is this:-

1. ECM may look for potential interest party for placement. Easier and quicker to get cash.
2. The value E&O is much higher than than the proposed special dividend. Therefore, not all shares and warrants currently hold by ECM will be distributed out. Remember part of the special dividend is cash.
3. Don't one find it interesting, why would the company proposed payment in specie especially more than 50% of ECM hold by Tan Sri. Azman Hashim, Lim Kian Onn and Dato Sri. Kalimulah, who are the founder and BOD of the company? If the deal is bad and they don't want E&O shares, it won't even get to proposed.

Conclusion:- These parties win on all angle. They get to benefit from the capital reduction of RM234.74mil (bulk of the distribution) and E&O shares + cash of RM85.36mil (special dividend). Guess who are the biggest owner?

In short, they don't mind short term volatilitty by inheriting E&O shares but they benefit it long term. ECM is an investment bank, they could have placed out the share easily at a discount. But they chose this path, because the directors knew, they can't buy enough of E&O. Besides, why buy when you can inherit it for free?

Think about it.

Very detail write up on E&O, have a read:-
https://stocktact.wordpress.com/2015/05/22/eo-berhad-time-to-revisit/

I was just explaining to another investor of this stock. I've just pointed out to him that there is positive sign for E&O. Here is the snippet on my email to him...you can check my point using Chartnexus:-

"On daily chart - The support is at RM1.90 and second support is RM1.86. To me, the most important support is at RM1.86. Breaching that means it is heading to RM1.80. If you are to look on the candlestick, it forms hammer then a long black candle but stop at RM1.90. I have reason to believe it is consolidating at this level.

Why? Simple.. looking at RSI vs price chart - it is showing divergence. MACD vs price chart - it is showing divergence and finally it is trading at the lower band of Bollinger. Volume is also coming off when it is trending down. So, RM1.86 is very possible while I am hoping RM1.90 is a strong support. The real kicker will come in if the result that is due in few days time beats expectation. Then you will see a strong rebound.

I don't want to over-promoting this stock. But I am getting more bullish on this stock. If you are fundamental person, then as it go lower, it gets cheaper. If you are a technical person, then what I have explain will provide some comfort, while waiting for the announcement of the result. Again, because I a strong believer of this stock, I'm betting big on the warrant."

The MD continue his buying spree amidst lower volume today. It is interesting to note, there is a divergence between the warrant and mother share. Someone is "silly" enough to dump 8 share, 600 share just to bring the price down. Intentionally? I don't know...

What I know, the buying back is a good sign...

Hi Rockford. Thanks. I have already replied.

Hi Rockford. Unfortunately no, if you don't mind please send to:- pakar.ekuiti@gmail.com

Would love to participate in your discussion. Thanks.

Hi Rockford. Do you mind to re-send the email? I didn't receive any email from you. Thanks.

This is not a stock specific issue. The market in general is weak. What is more interesting is the CEO himself keeps buying back the share at this price. If he is purchasing it at a small quantity then it is meaningless, but for a trade to worth RM1million for every buyback, it speaks some assurances. Something is definitely coming for this stock, because no one will put their substantial money in when the market is direction-less currently. Why not wait even if you are the one running for the company?

For risk adverse investors, I suggest buying the stock. But for higher risk investors with investment horizon of 1 - 2 years, I strongly suggest to buy warrant, because you will be able to DOUBLE your money at least. In term of matrix comparing to its peers, E&O's warrant provides the highest gearing with relatively lower premium. You can do a check the peer comparison using your e-broking account.

I am strong believer, the company will need the money from the warrants, in order to support its development in Penang. Projects in UK will depends on its successful listing in UK which is coming or perhaps JV with local partners, just like what they did with Mitsui Fudosan. Just watch this space.

cowboyjoe:- Your view is too simplistic. You should also consider the NPV from the cash flow, the CAPEX required for well development (if you understand Keng Seng's sarcasm) plus you need to get your fact right, ie. Which company acquired an offshore well and which one is acquiring and onshore well? Why is it important? Cause onshore well has lower CAPEX and has shorter payback period. And with shorter payback period will result in higher NPV and higher valuation.

Tell me if I'm wrong. Please don't look at one parameter and straight conclude it is an expensive deal. Cheers...

Quite surprising to see Tengku the Principal Officer purchase warrants instead of the mother share. What's more surprising is, those warrants at acquired outside tradition hours. I'm sure at the price his pay, he can abundant from the market. But why purchase after trading hour?

No one will know. But on thing for sure, warrants are worthless if no QA by the 3rd year. His purchase though not very significant still represents confidence that QA will be approved. But I believe his purchase of the warrants will not stop there. Things will move very fast from here, I suspect.

rich: You may want to look at the other projects by E&O other than STP1. Secondly, no way the land reclaim will be consumed by E&O solely. So don't be surprise there will be land sale during the reclamation work.

Reclaimation cost will set the base value of the land in STP2.
Land sale will push the value of the land even higher from the base value.

That will a major catalyst for E&O. If Batu Kawan is able to sell at such valuation, how much do you think the reclaimed land will worth on the island? We are talking about raw land here. After setting the price of the raw la d through land sale, the value of the land will be further enhanced by building on those land. If you are to consider potential GDV versus their reclaimation cost, you will realized E&O is deep in value. In fact, very deep in value!

Voila... After my previous posting and guess what's the latest announcement from E&O? It may sound like a conspiracy theory but I believe it is not. Mr. Tham bought in total 1,000,000 units during 14th and 15th of April.

Based on this exercise, we roughly can establish two things:-

1. The floor price for this stock even after assuming my conspiracy theory is wrong.
2. The floor price for the warrant.

And if one is to agree with the point 1 and 2, then the volatily based on current floor price to the peak price makes warrants extremely attractive. Warrants are most attractive when it is at the bottom and has high volatily. I have written about warrants pricing for E&O, if you are interested just find my old postings.

That's my 2 cent.

Until the approval from SC and shareholders... On and off you will see traders trying to push up the share price to see the reaction of the markets. I'm not surprise in few days or in a week or so, there will be effort to push it up to gauge the market.

It is imperative to gauge the market before any "invisible hand" can move the share price... What's more important is not the short term volatility. What's more important is the share price will decide the outcome of the QA. The question here is what's the reasonable price before investors feel rewarded to vote for?

There have been some kind of concerted effort to surpress the share price of E&O. Just look at the bid and offer. There is huge offer park at RM1.93 (1st bid) but not willing to go lower than that. It has been ongoing this way lately for this stock. Of course there have succeeded in surpressing the share price. But most importantly, what's the goal of them doing it.

There are 2 reasons:-
1. Accumulate ahead of the better than expected 4Q result. It was publicly known the result for the final quarter will be a stellar one, well at least in comparison for the first 3 quarter.

2. Keep the warrants price low and accumulate. But the problem with warrants are the holders of these securities are pretty inelastic to the movement of the mother share. That said, there have been sign of accumulating then now consolidating. At the end of the day, it all depends how strong are the holders of the warrants. Long term holder will keep warrant especially everyone knows the RNAV of this stock will increase with its reclamation program in STP2. That's explain the inelasticity of E&O's warrant.

Only time will prove whether this theory is true. Result most likely to be announced in May...

Alexander Jin: You don't earn extra 10%. You earn extra 6% (share yield) * 10% (discount) i.e only earn extra 0.6%.

Check historical chart to verify...

One has to realized, there is pro and con of DRP. The pro is you get the share without any brokerage and you will most likely get it at the discount. I should not say likely, you will get it at a discount! But the disadvantage of it is, you will see a lot of seller after the ex-date. Reason being.. If I don't want to higher exposure in MBSB and I will get 5-6% (based on yield) more share than I wanted then I will sell my current or reduce my current holding after ex-date to make sure my exposure remains the same. The good thing is despite selling my current holdings after the ex-date the cost of my holdings are actually lower because of the discount I receive. I locked my profit and I reduce my holding cost.

So just beware of this scenario. There is benefit for cash dividend and DRP but always consider the another side of the coin. So don't be surprise if you see some selling after the ex-date. Or selling happening now, cause if I know this is going to happen, I won't care about my dividend cause I know there is a risk because of the above scenario my dividend may not compensate the loss from my capital. So I locked in what I have today and hoping to buy back later at lower price despite not getting my dividend.

That's what institutional fund manager will do...

It's just a matter of time before the "invisible hand" move the share price above RM0.71. It will be much higher than RM0.71.. I believe somewhere around RM0.75 if not higher to entice all shareholders to vote for the QA. The difference between the trust value per share is the incentive to support the management.

Many still think that share price will be the prelude of the outcome for the QA. But if you are from the management point of view, it is a GO or NO GO. No half way for it. Why? Because for every money return to the shareholders who voted against also means less capital in the trust to acquire asset, provided they still have time.

The reward to the management is too great for them to fail. Just because of these two reasons, share price will go above RM0.71, probably higher then since interest is earned daily. Even at RM0.75, are the current shareholders excited enough to vote for the QA? Depend on your answer, you will know where the share price heading too and what is the floor price for stock.

If one is a risk taker and have full faith this QA will go through. Then one should just go for warrants. Every 1sen increase in mother share will also result in 1 sen increase in the warrant. The downside however, if QA fail then you won't get anything. That's why it is not my cup of tea. Too risky though it is rewarding.

N3lly: Don't be surprise a lot of people has already done what you have suggested. It is all about yield enhancement.

GK Goh starts acquiring now...

Too much focus on the cash level for this company. What's more important is the completion of the QA. We all know the cash level as of March 20th is RM0.71. You can refer to the amount of cash in the trust as of March 20th in the circular regarding the QA. And by the end of 3 years the cash level should be RM0.728 (net tax and other costs). So cash level if you hold until maturity is 10% from RM0.66.

But what's more important is the approval of the QA. Why? Because if it is approve then share price will be way above RM0.75-0.80. The reason is simple, they need people to convert the warrants in order to pay off balance RM100mil which was supposed to be paid on staggered basis. With the conversion of warrant, they will get around RM200-300mil which is more than enough to pay for the balance of the acquisition (saving of 6% interest cost) and CAPEX for the well.

What's more important is why the QA is in Kazakhstan? The reason is simple.. It's because SC has dealt with oil well in Kazakhstan via Sumatec. As such, with prior experience the approval of the deal from SC is easier. Next hurdle is approval from shareholders. IMO, no investors are crazy enough to reject lest they are O&G specialist and think they deal is shitty.

I'm not surprise the share price will trade closer to RM0.71, ie the cash level. I think that is the minimal risk one can take since they 3rd year cash level is RM0.728 while providing upside if the deal is approved.

Think about it. Don't worry about the cash level. The fact is, it is trading way below it cash level!

CLIQ's case is different from Sona's. Sona was traded way above its cash level, in fact, easily 15-20% above its listing price of 50sen. CLIQ will likely trade above cash level of RM0.70 once all the weak holders are gone. And I'm not surprise at a premium of its listing price of RM0.75 with the completion of the QA.

Cash price for CLIQ assuming 3.0% compounded interest is RM0.74.

I was a supporter of this stock. But I heard there will be bad news for this counter. Most likely there will be cancellation of contract coming from the sister company. Then this counter will end up with couple more vessel with no secure contracts. My advise get out while you still can.

Long term story intact but short term sentiment will be bad.

It seems to me the trend has gotten worse the past 1 week. Value still intact but one can never fight the chart. Most likely, the price will head towards 2.0+. No point fighting with the market when the trend is week. What's more important now is preserve capital then buy in just enough for dividend.

Support is at RM1. There is a potential of technical rebound.

Yes, you are right :-)

The One is very technical and definitely someone that is trying to time the market to perfection.

klsetrader: i only can say if it is sold at 1.6-1.8x book, then it will be around RM1.50-1.60. But bear in mind, this is before the delivery of another 2 or potential 4 Acommodation Working Barge in 2016, which are in demand.

Ferisc: Don't talk about call or put warrants. Those are punting instruments for punters. In actual fact it has no impact or whatsoever on the mother share. Call and put warrants is just a derivative instruments based on mother share and it is issued by investment banks.

What I am referring to is warrants that are issued by the company. Conversion of warrants that are issued by company will result in higher share base, i.e. more share. If I am the shareholders of Perdana and do not want to have higher exposure of Perdana as a result of the conversion, I will sell ahead first. Then when I receive the converted shares, my exposure remains the same.

derrtan: its the conversion of warrants. if one wants to keep the same holding, they should get rid the excess before the conversion of the warrants.

Once the overhang is over, then the share price will re-rate back to 2.20ish. Then just wait for 2-3 months to see some announcement on corporate exercise. that's what i foresee, no guarantee, however.

Buyers beware. Who know they are going to acquire business that's loss making again?

The One: You ought to have a long term view to appreciate this stock. The selling is not as bad as you think considering what happen on the macro side. Also look at the most recent announcement to see why there is selling. Then look at the total volume and you should know when the selling will be done. It is because of that, I believe is not affected by macro which has affected many other stocks.

Soon people will realized it is temporary and climb back up to 1.20ish until the M&A happens. That's when you will reap huge reward.

Be very cautious. The share price gone up purely because of one day performance from Inari. It's not a stock for short term investors.

The deal was not a secret. Bank Islam has been looking to grow through M&A for the longest time. But the option they have are banks or financial institution that are smaller than themselves. It's logic. So just consider how many smaller banks in Malaysia which BIMB can acquired?

I have mentioned a while back, MBSB is a target M&A and previous RHB/CIMB offer price set how much MBSB should worth. Now if you are management and shareholders of MBSB which receive RM2.82 as offer price, do you think any offer lower than that is acceptable? Think about it. Once you go black, you can't go back. This is especially through when operationally it was better than before. Forget about macro because every single banks in malaysia will be affected.

This news is not a rumor. It's work in progress. All we need to do is stay invested and wait for the offer price.

DRP will always be lower. So it is good.

There are no leverage on MBSB-WA cause it is already deep in the money. And secondly, because high dividend, warrant holders will lose out, so it will worth less. Therefore, no leverage. Thirdly, MBSB-WA is expiring soon. That explain why MBSB-WA may not move as fast as the mother share.

In fact, Jayawin's opinion is as such that the company will not extend or refinance the short-term loan. No right business, is not aware of their debt maturity. That is one. You must be thinking CFO of Perdana Petroleum is not aware.

Secondly, it must be silly for the company to recognized RM50-60mil loss in one quarter due to forex losses. Jayawin has to read up on how a company recognized unrealized gain/loss on foreign borrowing. Not to forget, they quoted their charter rate in USD also... so are you saying only cost will balloon up due to higher USD but not the revenue?

Thirdly, to propose private issue sounds very intelligent but for every corporate exercise, it needs shareholders approval. And one of the major shareholders are Tabung Haji.. Do you think while Tabung Haji is looking to exit will still approve the exercise and inject money into Perdana? Not to mentioned, Dayang who looks to acquire Tabung Haji, will waste it resources to pump in money to Perdana and let go of its opportunity to acquire Tabung Haji's block?

Isn't it easier to re-finance the debt?

Hmmm.....

Those that believe in this company should just focus on the warrant. As long as the mother share price is above RM2.25, warrants will hold. Why? Because warrants are worth RM0.65, at this price. But again, one will ask how come the warrant didn't trade at RM0.65? I have no answer other than to say it takes time for the market to find equilibrium price for the warrants.

Read my previous post to find out why, it is worth RM0.65. To be frank, I am fearful too, so I keep nimble at current price.

The One: Errr.. the idea of stay invested and be confident, meaning this is a good stock and if you have long term view, i.e. more than a month, one should just buy. The re-rating will come after they announce the DRP price in 3 weeks time.

And not staying away. Work out, what is your price after the ex-dividend. Then you will know where to position yourself.

Perdana is a GO candidate by Dayang. This is a known knowledge to those that are close to the industry. Because Perdana is a non-syariah counter and has no plan to be a syariah counter due to nature of the business, Tabung Haji "may" have to divest its investment in Perdana. So, here are some facts to consider:-

1. the average price Tabung Haji is higher than current price;
2. there is already interested party to acquired the block; i.e. Dayang
3. however, Dayang may need to offer GO once it cross the 33.0% holding
4. Tabung Haji is also a shareholders of Dayang with 7.0% stake.
5. Dayang done 80mil share placement last year. What do you think it is for?

So rumor has it, Tabung Haji will be able to divest its stake in Perdana before May 2015, higher than its average purchase price. The acquirer (Dayang) may have to purchase anything between 1.6-1.8x of Perdana's book. Bear in mind, Perdana has the youngest fleet and its the only company in the region with huge fleet of AWB. So you roughly know where the share price is heading for Perdana or how it should be valued.

Secondly, the purchase price may be part cash and part share swap or fully cash depending on the negotiation between the acquirer and Tabung Haji. Don't forget, Dayang has done a placement of 80 million share late last year in preparation for this, so they have a lot of cash for this purpose.

Good luck.

It is not surprise for the weakness in share price. It is intentionally so until the company announce the price for Dividend Reinvesment Plan (DRP). It will take 3 weeks from the quarterly announcement to annouce the price for DRP. With lower price, one will receive more shares before the re-rating continue. Those that unaware of what is going on will subject themselves to those that try to lower down the price temporarily.

Stay invested and confident.

Saturn is right to mention that the conversion of the warrant will provide a source of funding to the company. But your argument is based on the premium for the warrant should be narrowed to make it attractive to convert. You are coming from the angle everyone sold their free warrants and all warrants holders are new buyers (ie not those that get free warrant). Hence, the premium should be narrowed and eventually to no premium for them to convert.

But bear in mind, that is not the case. Many warrant holders are the original warrant holders in my opinion and as long as the mother share has potential to go above RM2.60, the warrants will continue to trade on premium and higher one esp. on its high gearing. So in the junction, warrants provides better upside until the warrant is In The Money.

Thereafter, the mother share or warrant price has to be "operated" in such a way it is attractive for people to convert and provide funding to the company. Warrants at this junction should worth around RM0.65 but it takes time for the market to find the equilibrium price for the warrants.

The option 1 & 3 all pointed to warrant going down just to narrow the premium. That in my opinion will only happen; ie, the premium between the mother share and warrant is narrowed ONLY when the warrants are In The Money. Thereafter (after RM2.60), you are buying intrinsic value of the warrant and yes the premium will narrow. But until then, the choice is obvious. Warrant will give higher return compare to mother share.

You cannot view a premium for a warrant without looking at its gearing. Secondly, you cannot view warrant without understand the the historical/implied volatility on the warrant. Because of its gearing is 5x; i.e. Every 1% up in mother share will result in 5% up in warrant "theoretically", so you cannot say 31% premium is expensive. You have to look at the premium relative to gearing.

The warrant present much better return to the mother share.

There are more retail sellers than buyer (insti or retail) just by looking at numbers of units per order. Again, someone has successful creates enough fear to pull out the sellers. Strong and long term investors should pay attention to this counter.

In my opinion, there are a lot self fulfilling prophecy here. No one stock can be operated forever, if there is any in the first place. Volatility is part of the game. Real investors just have to have a longer term vision to reap the reward. I'm not a shareholders yet, but warrants do look interesting to me.

kcc888: I would be a seller of PR. But I also won't recommend a buy on mother with this exercise going on. All I can say is look for the support for this counter. You may have the opportunity. However If you are long term, current price is decent.

Good luck

Mr. Koay: You are either very rich or you are in the industry to own a Bloomberg. I'm just curious why your volatility you chose 40% and not 25% or 30%?

You should know the volatility makes a lot of difference. Let me ask you since Insas is at relatively low and let's assume it has potential to move to RM1. How much is the volatility from RM0.80 to RM1.00. It's 25%!! And what's the volatility from RM1 to RM0.80. It's 25%!!

And you are pricing the warrant using 40% volatility and value your warrant at RM0.26?! I would value the warrant using 25-30% MAX! Don't treat everyone as an idiot. What will be the warrant at RM0.80 and volatility of 25%? Why don't you use your Bloomberg and compute it! Don't under-utilised it. It's expensive.

You cannot make your investment case with blue sky scenario. You have to make your investment case at base case or worse case scenario so you know the risk you are taking. So Murali, the warrants can trade at any value. Be it RM0.10, RM0.15, RM0.26 or even RM0.40. Your appetite is different from me. So I respect your view. You are blue sky scenario man. That's fine!

Hi Saturn. Which earlier comment you are refering to even though I have been following to. And why is it 3rd of February when the warrants supposed to be listed tomorrow?

Do you mind to share? Thanks in advance.

murali: I don't have to create fear. I only offer my opinion. I say if you are original shareholders who inherited the rights, subscribe! But if you can get more by selling your rights, then do it! And I have done it!

Why? RPS will not worth RM1.00 period!
Warrants at current price is worth RM0.10 period.

That said, if you have longer term view, of course warrants will worth more cause it has time value. But don't BUY rights at current price because your investment is your rights price + subscription price. And if you do that, you will take longer to reap the benefit.

I stand by my call. Up to you!