Posted by faberlicious > 2013-10-23 11:22 | Report Abuse

KC,thanks for your comments. I think u got it wrong on last year's dividends. They pay only 9 sen dividend( 1st and 2nd interim 3 sen plus 3 sen special dividend). Where got pay 41.35 sen so much.No lah. How did get that figure?

Posted by kcchongnz > 2013-10-23 17:30 | Report Abuse

faberlicious, yeah you are right. The 41.35 sen is the EPS, not dividend. Saw wrongly. Die lah, sure kena hantam by somebody already. How?

Yeah with dividend of just 9 sen, or a dividend yield of just 2.4%, it is not that damaging to the warrant holders. At the closing price of the underlying share at 3.72 today, using option pricing, the implied volatility is less than 15%. Meaning the warrant price of 71.5 sen today is reasonably low. Besides the gearing 5.2 is great.

See the difference in dividend yield on the warrant price? Next time, let me know the dividend per share of any warrant you intend to ask.

Posted by faberlicious > 2013-10-23 20:56 | Report Abuse

Posted by kcchongnz > Oct 23, 2013 05:30 PM | Report Abuse

faberlicious, yeah you are right. The 41.35 sen is the EPS, not dividend. Saw wrongly. Die lah, sure kena hantam by somebody already.

Sure kena hantam ah? Ha ha ,that's a good one KC.

Posted by kcchongnz > 2013-10-24 15:57 | Report Abuse

faberlicious, thanks for this MBMR Wa tip just yesterday. Earn some money for tonight's dinner for the family.

Now I find company warrant better to play than call warrant.

很好玩的遊戲

Posted by faberlicious > 2013-10-25 14:18 | Report Abuse

Ah,glad you make some money from MBMR WA KC.If I find some more "chun" warrant,will share with you ok. :)

Posted by Avocado_C > 2013-11-01 11:15 | Report Abuse

*Sigh* I just wanted to rant ... I missed out on my own warrant selection - SPRITZER-WA. Today fly to 70cents, I didn't monitor price movement lately because busy at work :-(

Posted by 林俊松 > 2013-11-03 21:13 | Report Abuse

KCchong, how u feel about Mah Sing WB warrant? Can enter now?

Posted by kcchongnz > 2013-11-06 11:14 | Report Abuse

Mahsing Wb (061113)

Mahsing Warrant B is trading at 55 sen while the underlying share is at RM2.20 now on 6th November 2013. It has an exercise price of RM 1.98 and the expiry date is on 18th March 2018, or in about 4.5 years time. The warrant is hence in-the-money with an intrinsic value of 22cents (2.20-1.98). However if you buy Wb at the price now of 55 sen now, you pay a premium of 33.0 sen, or a premium of 15%. This premium appears to be a little high but there is a gearing of 4 times for Wb. Moreover, the expiry date is quite a long time to come. Hence if you are bullish about Mahsing, Wb may offer a good alternative with a lower cost.

The theoretical value of warrant depends on the price of the underlying share, the exercise price, time to expiry, its volatility, the risk-free rate; in that order of importance. The Black-Scholes option pricing model, using a historical volatility of 31.5%, risk free rate of 3.5%, dividend yield of 2.3% and Mahsing’s price now at 2.20 shows that the warrant has a theoretical value of 64 sen, or 15% above its present price of 55 sen.

My personal opinion is Wb offers a better investing opportunity because of its reasonable premium with a good gearing . It also has quite a long time before expiry. Furthermore there is good upside potential for the underlying share as Mahsing has been aggressive in its development projects.

Posted by nightshade > 2013-11-09 13:24 | Report Abuse

Kulim: Currently closed at RM3.66

Kulim-WC
Maturity Date 27/02/2016
Revised Strike Price MYR 3.1300
Exercise/ Conversion Ratio 1 Warrant: 1 ordinary share

Kulim- CN (C)
Maturity Date: 28/02/2014
Exercise Price: MYR 3.70
Exercise Ratio: 3 : 1

I'm feeling comfortable with the accumulation activities by major shareholders like Johor Corp, EPF & KWP. Normally when the big guys like them around accumulating the underlying, the chances to make money in the warrant also increases

Posted by kcchongnz > 2013-11-11 06:32 | Report Abuse

Yeah, if one is bullish about Kulim, the company as well as the call warrants offer good punt. I said "punt" because fundamentally, I don't think Kulim is a good company. The return of the warrants has to depend on on the insiders to fry up the share price.

I prefer CN with a reasonable premium of just 5.2%, but a good gearing of 24 times, and expiring in more than 4 months time.

A high gearing is very good when the underlying share moves up high, but the reverse is also true if the share price goes the other way round.

So how sure are you about the movement of the underlying share price?

Posted by nightshade > 2013-11-19 08:10 | Report Abuse

nothing is sure but we are on higher winning position as the sentiment turn bullish for overall palm oil sector

Posted by kcchongnz > 2013-11-19 13:04 | Report Abuse

Sime call warrant CW (19/11/13)

Sime Call Warrant CW is trading at 10.5 sen while the underlying share is at RM9.80 now at the morning close on 19 November 2013. It has an exercise price of RM 9.40 and the expiry date is on 30 May 2014, or more than 6 months time. The conversion ratio is 4:1.

The call warrant is hence in-the-money with an intrinsic value of 10cents. If you buy CW at the price now of 10.5 sen now, you pay a small premium of half a sen, or 0.2%.

It is indeed a surprise that with a such a high gearing of 23 times of CW, or an effective leverage of 15 times, the premium asked is so small. Moreover, the expiry date is still a long way to go. Hence if you are bullish about Sime, CW offers an extremely good and exciting punt.

The table below shows the percentage gain/loss of CW with the settlement price of the underlying share at the expiry date.


Uly Price 9.40 9.60 9.80 10.00 10.50 11.00 11.50 12.00
Uly gain/loss -4.08% -2.04% 0.00% 2.04% 7.14% 12.24% 17.35% 22.45%
CW gain/loss -100.0% -52.4% -4.8% 42.9% 161.9% 281.0% 400.0% 519.0%

Posted by nightshade > 2013-11-19 13:05 | Report Abuse

MISC-CT at current situation

Posted by kcchongnz > 2013-11-24 06:04 | Report Abuse

The power of leverage in investing: Warrants

Although many people like to use leverage to amplify return from the stock market, there are equal or may be even more of them scorn it. Yes, investing with leverage cuts both ends. So as a self proclaimed prudent investor, why do I advocate the use of leverage in investing in warrants?

The theoretical value of warrant depends on the price of the underlying share, the exercise price, time to expiry, its volatility, dividend payment of the underlying and the risk-free rate.
Let us take a warrant PJ Development Warrant C (WC) as an example how a leveraged instrument can be used as a financial risk management in investing rather than punting.

Wc has an exercise price of 1.00 and expire in 7 years time on 4th December 2020. At the latest closing price of PJD and Wc at 1.28 and 35.5 sen respectively, the leverage or gearing is 3.6 times. Wc is in-the-money now but it is trading at a premium of 6%. This means that if you buy Wc at 35.5 sen and pay RM1.00 to send it to convert to PJD share, you are overpaying to own PJD shares by 6%. But who would be so stupid to do that ? There is precious time value in Wc which you won’t want to lose it by converting Wc to PJD share now.

Let say I am bullish about PJD that the company will do well in the next 7 years and I believe that its share price will go up to RM2.00 within this 7 years before the expiry of Wc. Let say I first intend to invest in 10,000 shares of PJD for RM12800. If PJD share price goes up to RM2, I will sell it for a profit of RM7200, or 56%. Now instead of placing RM12800 at risk, what if I spend just RM4000 to purchase 11200 shares of Wc, or just a third of capital layout?

I would achieve my goals if PJD really goes up to RM 2.00 within this 7 years as I would convert Wc and then sell in the market of the converted share of PJD for RM2.00. I would make the same amount of money, i.e. RM7200, with much lower capital layout and my return is now 182%.

Of course the reverse is also true. If PJD share price goes down by 6% to RM1.20 and as the warrant is still in-the-money, I have to convert Wc as it is expiring, I would lose 44%. What if there is a major economic disaster and PJD goes bankrupt? One will lose all his money whether you are in PJD or Wc. But PJD shareholders lose RM12800, whereas Wc investors lose only RM4000.

Yes, the beauty about warrant investors is warrant holders has the right but not the obligation to convert to the underlying share when it is out-of-the-money, i.e. when PJD share price is below RM1.00, the conversion price. Hence the downside risk of warrant is lower and limited to the lower cost of you investment in warrants.

The table below shows the payoff of Wc with various prices of the underlying share price.

PJD 1.00 1.20 1.40 1.60 1.80 2.00
Wc 0.00 0.20 0.40 0.60 0.80 1.00
Gain PJD -22% -6% 9% 25% 41% 56%
Gain Wc -100% -44% 13% 69% 125% 182%

KC Chong (Auckland 24 November 2013)

Posted by kcchongnz > 2013-12-20 13:31 | Report Abuse

Hibiscus warrant, anyone?

This morning, Hibiscus share price closed 2 sen up to RM2.13 with a volume of 2.9m while its warrant diverged and closed down 6 sen to RM1.55 with a volume of 11m shares. Why?

Hibiscus Wa has 8 months to expire. It has an exercise price of 50 sen. At the prices stated above, the intrinsic value of Wa is RM1.63. That is right. At RM1.55, Wa is trading at a discount of 4%, plus 8 months of free time value. Can't you see the big fat frog jumping all around?

But wait! Before you jump in and buy loads of Wa, think about these:

1)Who are those selling the warrants? Who got the most number of these free warrants in the first place?
2) Why did they sell the warrant with such a discount?
3) Why didn't they convert to Hibiscus share and then sell at a higher price?
4) Are they stupid? I don't think so.
5) Why the buy volume of the underlying share (which went up)is so much lower than the sell volume of warrant (which went down)?

There are simply too many whys. Don't you think so?

Let's have a cup of black Cappuccino or flat white to get a clear mind.

Posted by houseofordos > 2013-12-20 16:27 | Report Abuse

KC, what you are describing sounds a lot like the Instacom case where the director also dump the warrants....

Posted by kcchongnz > 2013-12-20 17:48 | Report Abuse

This is painting the tape. In the old days, punters looked at the tape for the price movement. So insiders traded and manipulated the stock prices as shown by the tape. Small retail punters simply have no chance, absolutely no chance to gamble with them.

Hibiscus share price dropped in such a fury by 32% from RM2.70 to the close of RM1.84 from just three days ago. Its warrant fell by 36% from RM2.08 to RM1.32 for the same period. Very seldom see such fast and fury action.

Hibiscus is no exception. Three months ago Sersol warrant dropped from 91 sen 35 sen, exactly the same way as Hibiscus.It is trading at 31 sen now.

Other similar cases are TMS, Ingens and Asupreme warrants etc. For punters who wish to make money gambling with insiders and manipulators, it is a jungle out there.

Posted by kcchongnz > 2013-12-27 15:56 | Report Abuse

Arbitrage opportunity for Hibiscus warrants

Hibiscus share is trading at 1.74 while its warrant is trading at 1.16 right now. There is a discount on the warrants, a free lunch?

If I have 100000 shares of Hibiscus, I will do the following and pocket quite a fair bit of money without any change in my position.

Action No of shares price Amount
Sell Mother share 100000 1.740 174000
Buy Wa 100000 1.16 116000
Add conversion cost 100000 0.50 50000
Total cost xxxxxx xxxx 166000
Pocket xxxxxx xxxx 8000

I am sure there are plenty of smart investors out there. Why aren't they doing this? Are they stupid? I doubt so.

Posted by kcchongnz > 2013-12-27 15:59 | Report Abuse

The very logical actions of arbitrageurs would make any discount of warrants disappear. Why is this not happening?

Posted by tonylim > 2014-02-20 17:12 | Report Abuse

..

Posted by katappa > 2019-07-09 21:57 | Report Abuse

7 years ago...tonylim, masih hidup kah ?