Chart 1: Suncity's daily chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
Chart 2: Suncity's weekly chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
Monday, October 19, 2009
Suncity- uptrend to continue
Suncity will continue with its medium-term uptrend since breaking above its short-term downtrend line resistance at RM3.26 last week (see Chart 1 below). Its overhead resistance will come from its recent high of RM3.50 as well as the horizontal resistance of RM4.00 (see Chart 2 below).
Chart 1: Suncity's daily chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
Chart 2: Suncity's weekly chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
Chart 1: Suncity's daily chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
Chart 2: Suncity's weekly chart as at Oct 19, 2009_12.30noon(source: Quickcharts)
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6 comments:
hi alex,
can you pls comment on IJM Plant-OR? is it worth buying to convert?
and what do you think of media/nstp? notice big fall in nstp.
thanks
mbge7clt
Hi Maxwealth88,
I think IJMPlant is still in an uptrend, which makes it a good stock to buy & hold. (Note: I am not 100% sure that it is in an uptrend because Tradesignum & Quickcharts have yet to present an accurate chart for the stock.)
Is the adjustment in price reasonable? We can calculate the theoretical ex-rights value as follows: [(2.95 x 8) + (2.10 x 2)]/10 = 2.78. (Note: I have ignored the value of the 1 unit of warrant). So, the share is now trading below the theoretical ex-rights value of RM2.78, which is fairly normal. Why? Firstly, the share price may have ran too high ahead the ex-date. Secondly, the process of arbitrage has kicked in where the shareholders may swap the share for the Rights due pricing differential & a vicious cycle has taken hold. For outsiders hoping to buy into the stock, this is a good time to do so.
What's the best option? Go for the IJMPlant-OR. You get the shares at 10 sen higher but in return you will get 1 warrant for 2 shares applied for. Is the warrant valuable? The warrant for IJM group of companies normally command a good price.
On the Media's offer to acquire NSTP, I think it is a very unfair to the shareholders of NSTP. Can they get enough shareholders to accept? Probably yes. They need only 7% acceptance to gain majority control. It is dicey to take a chance on a sweetening of the deal. If you have bought NSTP early, just take profit & move on.
Alex,what do you think about Maxbiz? Volume starts to pick up and seems like forming an uptrend soon
Hi Trader,
Maxbiz is still in a long-term downtrend. Its immediate horizontal support is at RM0.025-0.035. Yesterday, it broke above the short-term downtrend line at RM0.055. It may revisit its recent high at RM0.12.
hi alex, i'm thinking to buy suncity-wa but the premium is so high currently. can u explain why it's premium is so high?
is it worth to buy at price below RM 0.50?
Hi Butcher,
Suncity-WA was issued in October 2007, after the stock had peaked at RM5.85. It has a 10-year tenor & an exercise price of RM4.87.
Suncity-WA was listed at a price of RM1.70 & dropped to a bottom at RM0.17-18 in October 2008. The underlying security traded at a low of RM1.41 in October 2008- giving Suncity-WA a premium of 260%.
Why would anyone buy a warrant at a premium of 260%? It could be due to the small initial outlay; the long tenor of the warrant; the prospect of recovery of the underlying security which is a decent company; and the existing warrant-holders' reluctance to sell at low prices. Even today, the same factors will also apply but of course the premium is not as high. If you take a long-term view, you can buy the warrant at lower prices (say, RM0.30-35). However, the high premium is an unpleasant fact that you will have to live with because of the high exercise price.
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