2 new CWs to be listed today- UMW-CA & IOI-CB.

Today, we will have the listing of 2 new CWs i.e. UMW-CA & IOI-CB. I have tabulated the main terms of these CWs below and, next to them, I've shown the terms of the existing IOI-CA & Sime-CA for comparison purposes.



IOI-CB is superior to IOI-CA in term of longer tenor (i.e. expiring in November this year for IOI-CB versus April this year for IOI-CA) but its premium is higher. Based on the IPO price of RM0.75, IOI-CB has a premium of 13.0% as compared to 1.3% for IOI-CA.

UMW-CA is compared to Sime-CA, another conglomerate that is its closest peer in the CWs universe, in my mind. Like IOI-CB, UMW-CA will have a longer tenor (just slightly over 2 months) but again priced at a premium. Based on its IPO price of RM0.78, it has a premium of 11.60% versus Sime-CA's premium of 3.51%.

Despite the higher premium, I believe both CWs will trade higher today. However, you may observe that the higher premium has been a drag on the price performance of newly-listed CWs for the first month of their trading. As such, I believe that newly-listed CWs should only be purchased if their premium has dropped below 10% (ideally, 6%) or if the underlying share has an exciting development.