The ex-date for Allianz's Rights Issue of Irredeemable Convertible Preference Shares (ICPS) was on July 5. The basis for the Rights Issue is 125 new ICPS for every 100 ordinary shares owned. The main terms of the Rights Issue are:
1. Subscription Price: RM3.18
2. Tenure: Perpetual
3. Conversion Price: 1 ordinary share for each ICPS surrendered
4. Conversion Period: 12 months after the listing of ICPS
5. Dividend Rate: 1.2 times the Dividend Rate of the ordinary share
From the above terms, you can see that ICPS may be preferred over the ordinary share as it carries a higher dividend rate. For more, go here.
Computation of Allianz's Theoretical ex-Rights Price
Allianz closed at RM4.65 on the last cum-date (July 5). If we assume that the ICPS is the same as the ordinary share, Allianz's Theoretical ex-Rights Price can be calculated as follows:
= [(cum-date Price X 1) + (Subscription Price x 1.25)] / 2.25
= [ (4.65 x 1) + (3.18 x 1.25)] / 2.25
= 3.83
What's a good price to purchase Allianz's ICPS Rights?
Assuming the ICPS has the same value as the ordinary share , the value of Allianz's ICPS Rights (Code: ALLIANZ-PR) can be computed by deducting the Subscription Price from Allianz's share price (closed at RM3.68 at the end of the morning session). It would be about 50 sen. ALLIANZ-PR closed at 40 sen at the end of the morning session.
Conclusion
Based on the above, ALLIANZ-PR may represent a cheaper route for getting into Allianz. Buy the Rights; subscribe for ICPS; and convert into the share after one year holding period.
Chart : Allianz's daily chart (with unadjusted price data) as at July 9, 2010_12.00am (Source: Quickchart)
10 comments:
hi alex,
thanks for sharing. could you pls explain what is ICPS? What is the purpose of ICPS compare to issuing rights? Is Allianz future prospect good?
thanks
maxwealth88
Hi Alex,
Can comment on SCOMIMR?
It will announce a “very substantial” transaction involving the disposal of some subsidiaries.
Is this a good thing or a bad thing?
Hi Alex
Need your opinion on SUPPORT (7131). This counter is oversold currently. Any chance of rebounding?
Thanks
JJ
If the ICPS trade higher than Allianz by 10%, the Allianz-PR should trade much higher right? Can be as high as RM0.80 right?
Hi MaxWealth88,
Allianz's prospect is quite exciting. I have posted on this company before.
I do not know why the company is issuing ICPS instead of ordinary shares. After all, the ICPS can be convert into ordinary shares on a 1-to-1 basis after a short period of 1 year.
Hi Kevin Soon,
SCOMIMR is expected to announce a “very substantial” transaction involving the disposal of a portion of its 80.54%-stake in PT Rig Tenders Indonesia Tbk, a company listed on the Jakarta Stock Exchange to a large Indonesian company, said to be involved in the coal business. PT Rig Tenders is primarily involved in the transportation and provision of logistics support for major coal producers in Indonesia.
Scomimr should be completing the sale of its 29.07%-stake in CH Offshore Ltd to Falcon Energy Group Ltd for total cash consideration of S$143.5 million. This disposal will lead to gain S$61.5 million.
With these 2 major disposal, what would be Scomimr's business prospect going forward? Without more detail, it is hard to guess how Scomimr will perform.
However, Scomimr is now trading at 0.36 times its NTA per share of RM1.19 as at 31/3/2010. Scomimr's books should be relatively clean after a substantial write-off of RM159 million for impairment loss on goodwill as well as provision for insurance claim & doubtful debts of RM14 million in QE31/12/2009. Based on heavy discount to its NTA, Scomimr could be a good long-term buy.
Links:
http://biz.thestar.com.my/news/story.asp?file=/2010/7/10/business/6640945&sec=business
http://www.theedgemalaysia.com/business-news/159244-scomi-marine-records-s615m-gain-from-sale-of-ch-offshore.html
Hi Yap,
Support's financial performance has not been very exciting for the past few quarters. For FY2010, Support's net profit dropped by 67% to RM4.2 million while its turnover declined by 29% to RM65 million. For 1Q2011, its net profit slid by 52% to RM1.4 million on the back of a 16%-drop in turnover to RM13 million.
Chartwise, we can see that a downtrend has formed. Support is likely to drift lower. A good support for a rebound is at the horizontal line at RM1.40. This is also the 200-day SMA for the stock.
Hi lydialsy2010
While it's possible that Allianz ICPS may one day trade higher than the ordinary share, it is not a very likely event. I would think it is more likely to trade at par with the ordinary share.
For the next few days, I would expect arbitraging to kick in, where you may see Allianz drifting lower and thus Allianz-PR may be dragged down. If this were to happen, it would make the Allianz-PR even more attractive. DO NOT get into Allianz-PR for a trade. The tenor is too short for that purpose. It would cease to trade on July 16.
Hi Alex
COuld you kindly give your view on Timecom and Jaks.
Not sure where its heading.
Thank you .
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