50% of all the Sunway-PA shares shall be mandatorily redeemed by the Co upon the expiry of 4 years from the date of issuance and the rest redeemed automatically at the end of the 5 year tenure, both on the basis of 1:1 exchange without payment involved. Meantime you will receive preferential interest @ 5.25% pa on a semi-annual payment basis.
Dear Kensington. There is a lot of confusion. Grateful if you can clear it up As my understanding after 4th -5th year it is conversion to the mother share at the market price but some say they will pay you back the RM1. Some even say the final conversion rate is still not yet spell out clearly at Bursa..
Ganseong, it is free and auto convert. my friend has asked from Sunway Investment Relationship Department. Ultimately, it will become Sunway ordinary share. Let us earn together. For those who has subscribed before the listing of PA, most of us are having paper gain now. Cheers.
Thank you Mr Jian. You even point out the potential of special dividend by Sunway which might cause the mother share to drop after the ex-date like what happened to Airasia after they sold off their aircraft. How about if they issue the bonus or share split? The mother share price might cut half!! This is the potential risk that I never think before this
Irred pref shares is about 1 billion. Basic shares = 5billion. Prevailing price is 1.48. Assuming this price remains same just before conversion. After conversion, the diluted price will theoretically be adjusted to 1.48*5/6= 1.23. Just a little cushion and pray mother share price doesn't drop in 4-5 years.
"Sunway shall at the discretion of the Board pay cumulative preferential dividend at the rate of 5.25% per annum calculated based on the issue price of ICPS of RM1.00". Does this mean that 5.25% dividend per year is 100% guaranteed but may be cumulatively paid later years if it is not declared in one particular year? Pardon me, can some sifu help on this point.
Today the Sunway PA is worth the interest payments for 5 years plus the value of mother shares. That is (52.5 x 5) + 1700 = RM1962.5. For this to happen, you must wait 5 years. Alternatively you can calculate the Present Value of a series of payment RM52.5 every year for 5 years plus RM 1700 at the end of 5th year. SO,
Share market is not engineering science. It is an art. There are hundred of factors influencing buying behavior and selling patterns. As at today market is only willing to pay 1220 for the same thing that is worth 1552 today and 1962 in 5 years. Its true value has been sadly neglected. Someday it will catch up. Hopefully..
Fully agree with trader808 that the price of Sunway PA seem really undervalued. The prices gap between mother share and PA as at 12 March 21 (RM1.69 vs RM1.22) is so wide (about 38.5%).
Assuming you dispose 1,000 shares of the mother share now, you are able to purchase back 1,384 shares of PA with the same value. You will receive the dividend payments for the next five years amounting to RM326.97 [(1,384 X RM0.0525 X 4) + (692 X RM0.0525)]. Of course, the mother shares are also entitled for dividend payment, but Sunway has to declare 6.54% dividend per share each year for the next five years to match the dividend payments of PA.
Ignoring the impact of the dividend payments between mother share and PA, assuming the price of mother share maintain at RM1.69 or drop to RM1.00 at the end of fifth year, the two scenarios as below :
Scenario 1 :
Price of mother share at the end of fifth year : RM1.69 Investment value if maintaining with holding 1,000 mother shares : RM1,690 Investment value if disposing 1,000 mother shares & purchase 1,384 PA : RM2,339 Diff (%) : 38.4%
Scenario 2 :
Price of mother share at the end of fifth year : RM1.00 Investment value if maintaining with holding 1,000 mother shares : RM1,000 Investment value if disposing 1,000 mother shares & purchase 1,384 PA : RM1,384 Diff (%) : 38.4%
If you are long term investor and confident with the management of Sunway where they will enhance the value of the mother shares at the end of fifth year, it's better to dispose the mother shares now and purchase PA with the potential higher returns of 38.4%.
As a shareholder of Sunway today, I intend to apply the above strategy. Can anyone here give me some advice whether this is a smart move ?
I have doubts where the issuance of this pa is based on the 1 out of 5 mother shares, where if at the end of year 5 all pa are converted to mother share, the market price of the mother share ought to drop because of dilution, price now is 1.71*5/6= only 1.415, which means it might not be so lucrative as scenario one, the issuance of dividend is also subject to profit, and discretion of the directors. 2nd worst scenario compared to scenario 2(assumption is no price drop) is now at 1.22 buy 1000, at year 5 dispose 1,415 sell 1000, gain (1.415-1.22=0,195)/1.415=13.7%. oops still looks lucrative. but we should discount the return rate over 5 years. 5 power root of 1.137=2.601% annual compounding interest. seriously this isnt much if you can manage your portfolio for more than 2.601% returns every year.
@tannyye Thanks for your comment. However, the formula used for calculating the price dilution seems overlook the value of PA (RM1.00) to be credited as share capital. It should be (RM1.71 X 5) + RM1.00/6 = RM1.59. At the same time, the investment value suppose to be RM1.22 and not RM1.415, therefore the returns should be : (RM1.59 - RM1.22)/RM1.22 = 30.3% excluding dividend received during the next five years. Of course, the payment of dividend to PA holders subjected to the profitability of the Group but Sunway need to pay dividend to PA holders first if they intend to declare any dividend to shareholders of ordinary shares during the next five years. Besides, there is a high possibility of appreciation for the price of mother share at the end of fifth year.
Entitlement Details: Preferential dividend of 5.25% per annum [based on the issue price of RM1.00 per irredeemable convertible preference shares ("ICPS")] for the period from 3 December 2020 up to and including 31 December 2020, in respect of the financial year ended 31 December 2020.
Entitlement Type: Others Entitlement Date and Time: 15/04/2021 05:00 PM Year Ending/Period Ending/Ended Date: 31/12/2020 EX Date: 14/04/2021 To SCANS Date: Payment Date: 28/04/2021
From the official company announcement on BURSA.com:
"Preferential dividend of 5.25% per annum (based on the issue price of RM1.00 per ICPS) for the period from 3 December 2020 (being the issue date) up to and including 31 December 2020, in respect of the financial year ended 31 December 2020."
Preferential dividend of 5.25% per annum [based on the issue price of RM1.00 per irredeemable convertible preference shares ("ICPS")] for the period from 1 January 2021 up to and including 30 June 2021, in respect of the financial year ending 31 December 2021 Ex-Date 30 Sep 2021 Entitlement date 01 Oct 2021 Entitlement time 5:00 PM Financial Year End 31 Dec 2021
just hold...as once the 5th year come in...is time for Sunway Medical Centre to be listed due to the recent GIC subscription of shares in SMC....so hold on tight and wait for it...in the mean time ejoy the 5.25% dividend holding the PA...as mother share will not enjoy that high yeild dividend.
If the Sunway Medical Centre is to be listed within the next 3 years (before Sunway-PA's maturity for conversion), would Sunway-PA holders be entitled to get the new shares of Sunway Medical Centre or at least get the right to purchase the new shares at a discounted/IPO price?
surely u dont get SMC shares if it got listed... else why this PA is dealing at about 20% discount to mother share when it has a higher 'dividend rate' also no conversion price need to be paid in future... but by the time u mature the share price will be factor in, thus no worry for now just hold (if you are holding)... if you are not holding right now can consider this as a FD with 3.5% dividend rate (0.0525/1.5) n potential future grown...
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