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Showing posts from October, 2007
American Baby

The indicative timing of events leading up to the listing of and quotation for the GOOGLE SW on the Call Warrants Board of Bursa Securities is set out as follows:-

Price fixing date
29 October 2007
Opening of the Offering 30 October 2007
Closing of the Offering at 3.30 p.m.
31 October 2007
Allotment of the SW to placees
9 November 2007
Listing of the SW on the Call Warrants Board of Bursa Securities
14 November 2007


Issue Size : Up to 90,000,000 SW
Entitlement Ratio : Three thousand (3,000) SW shall initially be entitled to one (1) GOOGLE Share
Reference Currency : United States Dollar (USD)
Settlement Currency : Ringgit Malaysia (RM)
Issue Price : RM0.11, being 14.59% of the Reference Price divided by 3,000 x exchange rate of USD/RM 3.3400, rounded up to the nearest sen
Exercise Price : USD680.00, being 100.4% of the Reference Price

As of yesterday's price of US$694, the premium is 12% for the call warrant at 11 sen. At 14 sen, the premium goes to 18%. Gearing would be 5.4x. I …
Best Plantation Play
Hap Seng Plantations Holdings Bhd's (HSP) initial public offering (IPO) of 300 million shares is expected to raise up to RM800 million - the biggest sale of shares in Malaysia this year so far. HSP's new shares are offered at RM2.65 per share, while the institutions side appears to be priced with a 50 sen premium on top of the IPO price. HSP forecasts a 56 per cent jump in net profit to RM157.7 million in the year ending January 31 2008. The IPO closes on November 2, with the shares targeted to be listed on the stock exchange on November 16. On 800m shares, the EPS would come in at 19.7 sen. Assuming 2009's net profit rises by 20%, net EPS would come to 23.6 sen. This will be the respective 2009 PER for Hap Seng Plantations market price on listing:
RM3.30 14x
RM3.50 14.8x
RM4.00 17x
But Hap Seng Plantations is not my pick, its IJM Plantations. Coincidentally, the EPS for March 2008 is 20 sen and for March 2009 EPS is slated to rise to 22 sen. That it, both …
Best Poker MoviesSince its a pretty dull day for business, thought I should recommend something for the holidays. Readers who have read my profile will know that I am a fan of poker, well, Texas Holdem to be exact. The game has been growing in popularity over the last 5 years thanks to the World Series of Poker tournaments. The subject matter is so simple yet complex that I am surprised not more movies has been made. There was a very well made series called Tilt, which is available on DVD, that was a blast. Rounders used tobe a cult classic among poker players. Now I am happy to say a better poker movie is available. It stars Drew Barrymore, Eric Bana, Debra Messing and Robert Duvall - it looks at what drives a fanatic poker player and how the game affects everyone around a die hard player. A side note, there are at least 10 big real poker stars in the movie Lucky You as well. Lucky You probably won't be a smash hit but will be thoroughly enjoyed by poker aficionados. Good movies …
IPO Froth In Asia
Not since the internet bubble have we seen oversubscription for IPOs like these. One of the touted genuine internet China plays, Alibaba.com, has locked up about HK$450 billion, closing its retail book on Friday with the tranche 250 times oversubscribed. Its international allotment has attracted US$180 billion (HK$1.4 trillion) worth of orders. Sources said the IPO shares will be set at HK$13.50 apiece - the top end of the indicative range. Market watchers believe the shares will jump 50 percent above the offer price on their trading debut next month. Alibaba.com is more than just a flimsy internet play, we are not talking about 2000 anyway. The company has proven itself as an adequate player in the biggest potential internet market - thus explaining the enthusiastic response from international fund managers.
During the dotcom frenzy in 2000, Tom.com, owned by Cheung Kong was 669 times oversubscribed and locked up HK$51 billion. The stock closed at HK$7.75 on debut, or…
Humour 101

This is largely a repost (with some updates) of some smart-ass definition for financial jargon. Had to do it for the benefit of newer readers of the blog. Some of them are copied and some courtesy of my twisted sense of humour.

EBITDA
Earnings Before I Tricked the Dumb Auditor

EBIT

Earnings Before Irregularities and Tempering

Top-Down Investing

People with a bit of economics knowledge but scared shitless about accounting

Bottom-Up Investing

People who knows a bit about accounting but hates fiction

Unusual Market Activity

Something the management and directors always know NOTHING about

Averaging Down Investing

When you totally ignore the fact that you were wrong in the first instance

Doubling Up Investing

Making doubly sure that you are more than fully-invested when the stock eventually tanks

CEO

Chief Embezzlement Officer

CFO

Chief Fraud Officer

Second Board

What Second Board???

Margin Account

Shorter rope, tighter noose

Hedge Funds

"Institutionalised" margin accounts

NAV

Normal AndersenVal…
Smart & Smarter
Probably the most astute property guy in the world - Sam Zell, main owner of Equity Office Properties Trust. Sam's parents escaped Poland weeks before Nazi invasion; Sam born in Chicago 4 months after family's arrival in America. Built real estate empire with frat brother Robert Lurie; bought up cheap real estate throughout U.S. from distressed owners, kept buying when values recovered and boomed. EOPT's first fund scored with Mexican homebuilder Homex up 1,200%. Second fund targeted Brazil. The deal of the decade, Sam sold EOPT to Blackstone Group in February this year. Details below.
Bloomberg / NYT - American REITs are now forecast to suffer their worst decline in almost ten years and could drop up to 20% within the next year, according to Bloomberg. Economists cited by the New York Times estimate that problems in the mortgage markets could ultimately cost financial firms and investors up to US$400 billion. REIT stocks have outperformed the S&P 500…
The Hunt For Red Petrochina In October
PetroChina has set a lower-than- expected indicative price range of 15 yuan (HK$15.50) to 16.7 yuan for its A-share initial public offering, despite receiving overwhelming support from institutional investors in the three-day bookbuilding period this week. That was surprising considering that that the lowest bid offered by investors already hit 18.5 yuan - not to mention the highest bid of 20.5 yuan. Of the 7 A-share listings by H-share companies this year the usual discount is 11 to 20 percent to the H shares. So in actuality, the IPO price is within the accepted boundaries. However, that was interpreted by the general public as a "negative". I think the powers to be are also aware of the significant run-up in Petrochina's H-share price over the last 2 weeks as the planned IPO wheels began to turn. ------------------------------ Breaking News PetroChina has discovered another major gasfield in western Xinjiang, a source from the company…
Current Market Readings & Strategy

Investors in equity globally seem to be in a state of inertia, with the exception for HK and China, I guess. As it stand, on this day October 25, here are my market readings, concerns and strategy:

a) US dollar well underway in a progressive and managed correction since beginning of the year. When a currency goes on a prolonged weaker spell, it automatically boost competitiveness for US companies - that is a necessary evil because the powers to be (Paulson and Bernanke) know that the trade deficit, a slowing economy, correcting property prices and credit crunch could send the US economy into a tailspin.

Since they cannot get the yuan to appreciate faster, they can try to engineer a weaker USD on their own. Central banks everywhere have been reducing their US Treasuries holdings progressively over the last 18 months. Instead, many of these countries have started their own sovereign fund (ala Khazanah and Temasek; Kuwait investment Authority, Abu Dhab…
Vietnam Calling
If you examine Gamuda's earnings forecast for the next 3 years, much of it relies on the success of its Vietnam property and construction projects. Vietnam is the new India or Colombia, the really exciting emerging market today. Foreign funds have been piling into Gamuda and other Vietnam proxy plays. The valuations are such that nothing much can go wrong. Vietnam, for many Malaysian property developers, has become the land of milk and honey. Today, almost every big player wants a piece of the action.
Well, Gamuda is not the first, in fact Singaporean & South Korean companies have been piling in much earlier. On conservative estimates, there are RM200bn on-going projects that is supposed to be completed within the next 5 years. In Vietnam, obtaining an investment licence is very crucial, because without it, foreign developers cannot commence their projects. Berjaya Land Bhd is the first Malaysian company to be given an investment licence to start work in Vietnam…
The Root Causes Of Subprime
The Last Laugh (featuring John Bird & John Fortune) - Thanks to Boon (Trade Bursa Malaysia), I came across this bitingly funny, sarcastic poke at investment pros. The dry British wit is refreshing, not so in-your-face Americana style of comedy. However, there is too much truth within the comedy ... much too much truth! Watch the youtube link below...

http://www.youtube.com/watch?v=SJ_qK4g6ntM
Priced To Perfection
Trying to find a SELL report on Gamuda is near impossible. Going ex-today for its 1-for-1 bonus. RM4.60-4.70 now, seems to me too many positives have been priced in. When all the positives have been priced in, everything needs to go right. When everyone is a buyer, all the longs can only sell in the future.
The Positives:
a) Gamuda has supposedly received an offer from Kump Darul Ehsan to buy out its 40% stake in Splash water concession. KDE currently holds a 30% stake in Splash. Splash is the largest water producer in Selangor (supplying 43% of the state's needs). Concession ends in 2030. Gamuda may get RM700m-RM1bn. If the deal goes ahead, there could be a special dividend in the works of about 40 sen per share.
b) The high scale Vietnam project. Its an excellent exposure for the company and foreign institutional investors see Gamuda as a good proxy play into Vietnam. The project is expected to make up more than 30% of Gamuda's earnings in 3 years time. The…
A Price For Everything
TradeSter said...
On first trading day of Zijin-C1, the mother share closed in HK at HKD12.52, exercise price is HKD10.90 (convert to MYR by multiply currency rate 0.435), ratio 20:1, seems like my calculation for Zijin-C1 comes to very high premium 50-53%. Anyone can verify this high premium thingy on the 4 newly issued warrants today?
10:21 PM
Hedge Fund said...
Prop desk manipulation. Beware!
8:11 AM
TradeSter said...
ZIJIN-C1 and HKEX-C4 premimu is very high which is more than 50%. I wonder why people is so foolish to chase over it? Why are the market makers not doing their job correctly to set the warrant price relative to the mother share. Overvalued warrant price will definitely hurt those who chase them.
Comments - Both are very expensive, the premiums are too high for both HKEx-C4 and Zijin-C1. When its 50%, it takes a lot to work down the premium and the leverage is good but not that fantastic. Very rarely do you find CWs or even China shares go on a straight l…
Zijin Mining... Hmmm


China dolls still arriving at our shores despite protestations by the wives. I am just going to highlight the interesting ones.
Business - Principally engaged in the exploration, mining, processing, refining and sale of gold and non-ferrous metals and other mineral resources in the PRC, and is a large mining conglomerate primarily engaged in the production of gold and non-ferrous metals.
Business Review - For the year ended December 31, 2006 Summary - Favorable Production and Operation, Gold Business Remains the Main Business, Business of Copper and Zinc Continuously Improving
1. GOLD MINE BUSINESS - During the reporting period, the Group totally produced 20,700 kg of mine gold (665,520 ounces) which was mainly from 3 main gold mines, representing a growth of 35.6% over last year, of which, 13,870 kg (445,930 ounces) was produced at Zijinshan Gold Mine, 3,240 kg (104,168 ounces) was produced at Shuiyindong Gold Mine, and 1,100 kg (35,366 ounces) of gold was produced …
Black Gold & 3 Treasures?
kafka said...
Me again... just to add on a bit. Since you recommended CNOOC & Petrochina. How about ZC-CIMB (Black Gold)? It is a basket warrent consists of CNOOC, Petrochina, Sinopec, Scomi & Sapcres. Coincidentally, I remembered you recommended at least 4 out of 5 of the stocks above. Furthermore, it is traded at ~4% premium, decent maturity, and above average gearing of ~4. Though Basket Warrant calculation might be harder to maintain...hopefully CIMB investment manager knows how... :p
The Details - CIMB Investment Bank launches new basket call warrants 26 Sep 2007 CIMB Investment Bank Bhd launched two new basket call warrants today which give investors exposure to the share prices of listed regional stock exchanges or share prices of oil and gas companies. The 3 Treasures warrant is issued at 42 sen each. With 50 warrants, an investor gains exposure to a basket of two Bursa Malaysia shares, a half share in HK Exchanges & Clearing and one shar…
CIMB Warrants Team, Buck Up Pls

kam said...
Hi, Based on CNOOC RM0.44, Premium is 7.8%. Gearing 2.34.Tks

edwin said...
Dali, i think CIMB is really really wrong.. they made on fatal mistake in their calculations..When calculating the premium, they did not convert the warrant price into HKD (multiplied by ~2.25). Thats is why the premium for CCCC-C1 is ~25% on the digest while in actual fact it should be at about 3% at yesterday's closing prices.Sinopec-c1, should actually have a premium of 12% not a discount of 9%. Time to call CIMB and scold them!

Elizabeth wong :
Dear Dali
Sorry to be such a bother... Had another look at the cimb warrant digest, I think they made a boo boo with the prem info... of chlife c3 and c4 too...
Chlife C3 and C4 are at a prem of 19.5% and 9.1 % respectively. CIMB's fgures were a discount of 8% and 12%. Errors occur becuz warrant cost was not converted to HKD. CCCC-C1 discount is only 2.1%, contrary to what cimb is saying.. Incidentally, for cccc-c1, it is c…
What About The Issuers?
deborah said...
The HK china cover warrants hve really gone up a lot... I read comments of investors of local cw that they dont make money as the local market is perceived to be more controllable. My question is, with all the money that we hope to collect come maturity, wld it be a big dent on the income statement of the issuers?

greenbull said...
I am also curious of the fact that how it will affect the issuer whether the cws rise or fall in price? how do they get the extra cash to pay off the investors if the cw price goes up? i really hope someone will explain to new initiates like us. recently i bought ioicorp-cw and let it expire. I have still to receive the payout from them. i am supposed to get the difference in the mother and exercise price. would the return be more if i just sold the cw just before it expired? I am heavily involved in the H-shares cws, thanks to the recommendations by Salvatore. I sole some last few days but the price kept going up. I thin…
Trading Strategies With The Chinese Covereds
This is for readers who have been following, investing, punting and trading in the Chinese covered warrants for at least the last 3 months. These are not hard and fast rules, but guidelines:
a) If you haven't participated at all in H-shares or their covered warrants, to chase on "up days" would give you a lot more risks than the inherent rewards. If you haven't participated before, you may still go in but you have to time your entry levels - there will be down days, it won't be a straight line to 10,000 that's for sure. The excitement brings about a lot of volatility in these warrants now, so timing entry levels are crucial.
b) If you followed the advice of holding till maturity, you should keep at it because even if the market there corrects, you have ample room and ample time to jump off ship. So, its better to ride the trend till expiry. If things look shaky and you wish to take some profit, go ahead but don't …
Scomi Marine, Back On Radar Screen
On September 4, 2007 EPF collected another 36.84m shares in Scomi Marine and now holds over 5% of the company. Catalysts include the probable sale of its 29% stake in CH Offshore Ltd. The sale should proceed because the price that can be obtained now will be very high on historical standards. Plus, Scomi Marine could put the proceeds to better synergistic use by focusing on specialty vessels such as barges, which gives better margin and sees better demand. The stake was acquired for 40 Singaporean cents a share. At the time of writing, Ch Offshore trades around S$1.00.
The move is likely because Scomi Marine has RM340.8m in debt. If we look at Scomi Marine's current share price of between RM1.21-1.25, the stake in CH Offshore alone is worth 60 sen minimum. The sale is also likely because even though it has a 29% stake, Scomi Marine does not really have a say in management. More importantly, it can only equity account the results and basically rely …
Too Much, Too Fast, Too Soon?
The markets in H-shares and Hang Seng index have moved way too fast, too much in too short a period of time. While I am still bullish on H-shares, especially the chosen ones such as BOC, Petrochina, Shenhua, Sinopec, CCCC and CNOOC - the movements yesterday and today look dodgy and over exuberant (to borrow a phrase from Greenspan). PetroChina shot through the roof to become the world's second-largest company by market value. The market is now driven by psychology and the need NOT to be left behind - everyone knows that is not a good strategy.
There is a lot of greed in terms of people's price expectations. Greed is good, and greed is why people are in stocks, so no problem there. Its the expectations side, when expectations are very high, it creates mania. Plus, there has been an overwhelming belief that nothing can go wrong in China - that is probably the biggest short term worry, nothing can go wrong, nothing is supposed to go wrong, surely they…
Lee Shau Kee Says Sell Above 30,000!
Asia's very own Warren Buffet, Lee Shau Kee of Henderson Land, has finally set a sell target for the Hang Seng index. For the first time since March, tycoon Lee Shau-kee seems to sense some risk riding the bull market. He indicated on Friday he might consider offloading part of his investment portfolio when the benchmark Hang Seng Index reaches 30,000 points. Thursday's surge by the HSI above the 29,000 barrier occurred much sooner than expected, Lee said at the Forum on Future Development of China in Guangzhou. "The stock market has accumulated quite a bit of growth. It's not a nice time to invest further," he said.
Lee reminded people not to engage in what he called momentum buying. He said his motto is always to "buy low" and that is the basis on which he encouraged investors to "seize the opportunity" to do so during this month's volatility. Insurance and energy stocks remain Lee's favorites, but…
Love, Money, Honesty & Trading
SOMETHING FOR THE HOLIDAYS. THIS APPEARED ON CRAIG'S LIST. POSTING THE WHOLE THREAD AS I GOT IT IN AN EMAIL. OBVIOUSLY A PRAGMATIC WOMAN IN NEW YORK.
What am I doing wrong? Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York. I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all.
Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a road block. 250,000 won't get me to Central Park West. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is sh…