KK,not that they don complain,for all you know the majority big shareholders inclusive of the CEO are in cahoot pushed down prices to biy cheap,then push up when good news released..hope they wont backfire themselves ending up trading among themselves when punters and traders feel cheated and also dried up to support the uptrend later..just my 2senworth,trade at yor own risk.
ASIA MEDIA GROUP BERHAD (“AMEDIA” OR THE “COMPANY”)
(I) PROPOSED BONUS ISSUE OF SHARES; (II) PROPOSED FREE WARRANTS ISSUE; (III) PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL; AND (IV) PROPOSED AMENDMENT.
(COLLECTIVELY REFERRED TO AS THE “PROPOSALS”) will up tomorrow?
Bonus shares – A positive sign. by J Victor on March 29th, 2011
WHAT ARE THEY?
Bonus shares are issued in a certain proportion to the existing holders. A 2 for 1 bonus would mean you get two additional shares — free of cost — for the one share you hold in the company.If you hold 100 shares of a company and a 2:1 bonus offer is declared, you get 200 shares free. That means your total holding of shares in that company will now be 300 instead of 100 at no cost to you.
WHO BEARS THE COST IF IT’S FREE FOR ME?
You are right. There is no free lunch.Bonus shares are issued by cashing in on the free reserves (accumulated profits) of the company.A company builds up its reserves by retaining part of its profit over the years (the part that is not paid out as dividend). After a while, these free reserves increase, and the company wanting to issue bonus shares converts part of the reserves into capital.So you do not pay; and the company’s profits are not impacted.
WHAT ARE THE EFFECTS OF A BONUS ISSUE?
Bonus shares do not directly affect a company’s performance. Bonus issue has following major effects.
1. Share capital gets increased according to the bonus issue ratio. 2. Liquidity in the stock increases. 3. Effective Earnings per share, Book Value and other per share values stand reduced. 4. Markets take the action usually as a favorable act. 5. Accumulated profits get reduced. 6. A bonus issue is taken as a sign of the good health of the company.
WILL THE SHARE PRICE CHANGE AFTER BONUS ISSUE?
A bonus issue adds to the total number of shares in the market.Say a company had 10 million shares. Now, with a bonus issue of 2:1, there will be 20 million shares issues. So now, there will be 30 million shares.This is referred to as a dilution in equity.Now the earnings of the company will have to be divided by that many more shares.(Earnings Per Share = Net Profit/ Number of Shares)Since the profits remain the same but the number of shares has increased, the EPS will decline.Theoretically,When EPS declines, the stock price should also decrease proportionately. But, in reality, it may not happen.
That’s because:
i. The stock is now more liquid. Now that there are so many more shares, it is easier to buy and sell.
ii. A bonus issue is a signal that the company is in a position to service its larger equity. What it means is that the management would not have given these shares if it was not confident of being able to increase its profits and distribute dividends on all these shares in the future.
THE RECORD DATE.
When a bonus issue is announced, the company also announces a record date for the issue. The record date is the date on which the bonus takes effect, and shareholders on that date are entitled to the bonus.
After the announcement of the bonus but before the record date, the shares are referred to as cum-bonus. After the record date, when the bonus has been given effect, the shares become ex-bonus.
HOW BONUS SHARES CREATES ENORMOUS WEALTH
Bonus shares, in the long run would create enormous wealth for the investor. For example, a Rs 10,000 invested in Wipro in 1980 would have grown into several Crores as shown below:-
In 1980 You buy 100 shares @ Rs 100 per share in your name . In 1981 company declared 1:1 bonus = you have 200 shares
In 1985 company declared 1:1 bonus = you have 400 shares. In 1986 company split the share to Rs. 10 = you have 4,000 shares
In 1987 company declared 1:1 bonus = you have 8,000 shares. In 1989 company declared 1:1 bonus = you have 16,000 shares
In 1992 company declared 1:1 bonus = you have 32,000 shares In 1995 company declared 1:1 bonus = you have 64,000 shares
In 1997 company declared 1:2 bonus = you have 1,92,000 shares. In 1999 company split the share to Rs. 2 = you have 9,60,000 shares
In 2004 company declared 1:2 bonus = you have 28,80,000 shares. In 2005 company declared 1:1 bonus = you have 57,60,000 shares
In 2010 company declared 2:3 bonus=you have 96,00,000 shares.
Share price of Wipro is Rs 428.00 in July 2010
The value of 57,60,000 shares in 2010 – 406.60 Crores.
CONCLUSION
Declaring Bonus shares is a sign that companies are increasing their profitability. If you look back, many companies have announced issues of bonus shares to their shareholders by capitalizing their free reserves . Shareholders have benefited tremendously, even after accounting the inevitable reduction in share prices post-bonus, since the floating stock of shares increases. So keep an eye on bonus history when you decide to buy a stock-It may be a good indicator that the company is healthy.
MARKET watchers are divided over the slew of bonus share issues which surfaced during the latest results reporting season, which ended recently.
In a bonus issue, existing shareholders are given new shares for free in proportion to their existing shareholdings. For instance, in a one-for-two bonus issue, shareholders will get one new share for every two existing shares they hold.
The idea is to reward loyal shareholders and to encourage trading of the stock by nudging the price down - which is almost always the result of issuing a significant number of new shares for free.
Most analysts agree that such issues achieve those twin goals of boosting stock liquidity and rewarding long-term investors in the company.
However, some have raised concerns over the unpredictable impact on share price, especially in the crucial period before and after the bonus shares start trading.
When a company issues bonus shares, this results in an enlarged share capital which, in theory, also drives the share price lower to a proportional extent.
However, some market watchers have noted that in some cases, the share price drops by a greater extent than would be expected given the larger number of shares.
Despite this uncertainty, in the past six weeks, about half a dozen companies listed here have announced bonus share issues in conjunction with their financial results. These include residential property developer Hiap Hoe, bakery chain BreadTalk and piping products supplier Cosmosteel.
'(Bonus share issues) increase liquidity, thus making it easier to trade on the market,' said Mr Terence Wong, co-head of research at DMG Securities.
He added that it is normally good news when a company issues bonus shares: It usually means means the business is doing well and that the firm is issuing new shares to reflect growth and expansion.
AmFraser strategist Najeeb Jarhom said: 'The issues serve as a reward to loyal shareholders so that they will stay with the company, and so that they will keep their shares.'
However, Mr Jarhom called into question the argument that the lower share price will actually push up trading volumes.
He said: 'Now, fund managers and big funds don't care if stock prices are high. Share prices of $10 to $15 are okay to them. The stocks will still be affordable compared to US stocks. Thus, liquidity is not an issue.'
Some questions also have been raised about the impact the bonus issues will have on the attractiveness of the stock.
Mr Ken Tai, a senior technical strategist from Kim Eng, said: 'When a firm declares bonus stocks, investors will want to chase after these entitlements. Thus they will firm up support for the stock's price before the ex-date (the date after which bonus shares can no longer be claimed). Sometimes, this can create artificial support for the shares.'
Mr Tai said that after a bonus issue, a share price will usually fall in proportion with the increased number of shares, but some stocks could over-adjust by falling more than the dilution factor.
'After the ex-date, it becomes a real wildcard and nobody knows what can happen,' he said.
Other than bonus shares, companies have other options to boost liquidity. Many firms have taken on a second listing in Hong Kong or elsewhere to boost trade volumes and valuations.
One example is China Fishery, which has decided to list its stock in Oslo, a major exchange for fishery companies like itself.
bro alwin..i dunno what price you want to enter..and it is difficult to estimate how low the price is going to go down or it is going to stabilize and poise for a rise but whatever it is...know this amedia is in a growth stage..and is making money and has the license to broadcast...i think at 0.30-0.32 is ok to take a position but trade at your own risk. I have put a buy queue order for 0.31 for 10 lots first good for two weeks on my itradecimb account hoping it will touch tnat level sooner or later. All the best. If you keep long term..better..trust that boy ricky wong..he knows how to make his baby amedia grow and grow.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Mingming
66 posts
Posted by Mingming > 2012-10-15 23:52 | Report Abuse
@alwinsywd0520, I think this share not stable yet. You can buy but "High risk High Return" ^_^