Tuesday, October 06, 2009

Genting SP- more CWs issued

Today, we have the listing of the 3rd CW for Genting SP. It is called Gens-C3 and it was issued by CIMB. Five days earlier, we saw the listing of Gens-C2 which was issued by OSK. The first CW for Genting SP, Gens-C1 was issued by CIMB on September 4th.

Why the flurry of new issue of CWs for this stock? Why are these CWs trading at such high premium, ranging from 21% to 43%? As you may already known by now, Genting SP is having a large Rights Issue of 1-for-5 at S$0.80 each which will close on October 12th. For some reason, Genting SP is currently trading at nearly the same price as it did on the last cum date for the entitlement for the Rights Issue, i.e. September 17th. There are two ways of looking at this development: It is either a very positive development for the stock, which may justify the high premium commanded by 3 CWs or the share price is being held at the current level. I would not want to say more on the later scenario, but I think it is interesting to note the flurry of new CWs issued based on Genting SP. These "smart moneys"- CIMB & OSK- are not too enamored by Genting SP's medium-term share price performance & thought issuing or writing CWs for Genting SP is a rewarding exercise. Who is right? The "smart moneys" or the retailers buying these CWs?

Table: Gens-CWs' main terms & their premium computation

I have appended below the chart of Genting SP for your easy viewing.

Chart: Genting SP's weekly chart as at Oct 5, 2009 (source: Yahoo Finance)


swifz said...

You should compare Genting SP CWs that are listed in Singapore too.

Based on my warrant calculator (swifz.angelfire.com), all the ITM CWs are traded with high premiums. The lowest premium is 14% with Feb 2010 expiration.

Kit said...

After looking at the Genting SP chart the share is showing double top and it will go down anytime after the rights! Is that right, Alex?

Alex Lu said...

Hi Swifz,

Thanks for the info.

Alex Lu said...

Hi Kit,

Something like that. The S$1.20 horizontal resistance will be a tough nut to crack.

Kit said...

Dear Alex,

Thanks for the info!