Let's look at the CWs below. Basically, we can divide them into 3 categories:
1) very short-term & expiring in 2nd quarter 2010 (Maxis-CA);
2) medium-term & expiring in 4th quarter 2010 (Maxis-CB & Maxis-CC); and
3) long-term & expiring in 1st quarter 2011 (Maxis-CD).
One can say that Maxis-CB & Maxis-CC are comparable as their expiry dates are fairly close to one another and that Maxis-CC is preferred to Maxis-CB as the latter has a higher premium. Overall, the premium for all four CWs are relatively high, especially for an underlying stock that is currently trading at a high PE of 18 times (based on annualized EPS of 30.4 sen for FY2009).
Table: Maxis-CWs main terms & conditions
Technically speaking, Maxis appears to be in a very short-term "bullish price channel" based on the intra-day chart below. From the price channel, we can see that Maxis will have trend line support at RM5.38 & price channel resistance at RM5.53. As long as this price channel remained intact, Maxis price movement for the short-term is likely to be favorable.
Chart: Maxis' 15-min chart as at Nov 30, 2009_4.20pm (Source: Quickcharts)
8 comments:
All CW is only good for Investment Bank !
Genting need Casino license for gambling biz.
OSK & CIMB no need license, they just need to issue CW to operate Casino Biz, in Bursa Malaysia.
Who is banker ? Who is Player !
with so many MaxisCWs issued, there is no way Maxis will go up, rite?
I heard Alam Maritim will JV with Tabung Haji. Is this JV will boost up the stock ?
Hi Alex,
I have look on the Carotec stock lately. I would like to seek advice from you about this stock.
Thank,
David
Hi David,
Carotec is still in a downtrend, with possible support at RM0.14 (the low recorded in March). You should look at its accounts to see how is this company performing lately.
With bearish technical outlook, it is best to avoid it.
Hi David,
I have no opinion on the JV between Alam & Tabung Haji. I don't know what Tabung Haji can bring to a JV, except money to fund Alam's aggressive vessel acquisition.
Hi MaxWealth88,
You are mostly right. However, if a stock were to go against conventional or collective wisdom, having a large outstanding CWs could be a BIG positive.
Assuming Maxis defies prediction of a dull existence & instead it enters into a steady uptrend, the CWs issuers caught in a naked position would have no choice but to cover themselves by buying the stock. They call this "dynamic hedging". Imagine the buying frenzy, if every issuers jumped in to cover themselves.
KC,
Who is banker ? Who is Player !
Good question! One of the big story of the recent US sub-prime problem is how Goldman Sachs made USD4 billion by betting that securities backed by risky home loans would fall in value. Some of these securities were even marketed by the same bank to its customers (who lost million). Imagine what would happen if the value of the same securities were to hold up for another 6 months (instead of collapsing), how much Goldman Sachs would have lost in the market. Some of these investment banks operated like casinos and, when they ran in trouble, they came crawling to the central bank for help. Has anything changed since the sub-prime debacle? Have they stopped paying huge bonus to traders who chalked up huge gain in Wall Street? It is back to the gun-slinging days again...
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