Today is the start of trading of MAS-OR, the Rights entitlement. An investor who buys 1000 MAS-OR would be entitled to subscribe for 1000 MAS shares at RM1.60 each. We have seen heavy selling of MAS-OR in the market, prompted by existing shareholders' decision not to apply for their allotted entitlement under the Rights Issue. This may present an attractive opportunity for arbitraging profit for the existing shareholders, who can sell their shares in MAS at the present price of RM1.92 and then acquire back the same share via MAS-OR (presently trading at RM0.14 each) & then subscribing for the Rights Issue share at an all-in cost of RM1.74. Those who want to gain entry into MAS, may choose the cheaper route of buying the MAS-OR & then subscribing for the Rights Issue share, instead of buying the share directly from the market.
Chartwise, we can see that MAS has broken below its recent uptrend line,S1-S1 at RM2.40 and is hanging stubbornly at the horizontal support at RM1.90-2.00.
Chart: MAS's monthly chart as at Feb 10, 2010 (Source: Tradesignum)
What is the best price to choose MAS and Dialog?
ReplyDeletehi alex,
ReplyDeletecould you pls comment on Gadang rights? will it suffer like MAS?
thanks
maxwealth
Hi Alex,
ReplyDeleteLatitud's Singapore subsidiary reports good results this morning. I see that the Latitud in KLSE has been climbing steadily since last month. I am not sure if this is due to price manipulation (goreng) or people is already expecting another very good results. Any comments? Thanks.
Dear Alex, currently i hold 200 lots of MAS, at the purchase price of RM2.6 before ex date. I understand that after the ex date, my buying price is averaged to RM2.1. If i sold my 200 lots today at RM1.92, is that mean i could have getting back RM1.92 + RM0.135? Or RM1.92 only?
ReplyDeleteI am confused here. Seek for your advice. Thanks.
Hi Once in every lifetime,
ReplyDeleteIf you had bought 200 lots of MAS before the ex-date at RM2.60, you would be holding 200 lots of MAS plus 200 lots of MAS-OR.
You may get a bit confused by the theoretical ex-right price. Since your purchase price is quite close to the closing price on the last cum-date, then let's compute the specific price for the 200 lots of MAS that you would own if you apply for the Rights Issue at RM1.60 each. You need to do the followings:
1. Add up your Total Outlay
=[20k x RM2.60]+[20k x RM1.60]
2. Divide Total Outlay by Total Shares held after the Rights Issue
=RM84k/40k
So, your shares' average cost would be RM2.10 each.
If you compared the theoretical value with the current trading prices of MAS & MAS-OR, you may get confused & somewhat depressed. Why are these instruments trading at much lower prices? Keeping it simple, I would say that the current trading prices of MAS & MAS-OR is a reflecting of the present bearish sentiment for the overall market & in particular, MAS as well as the dynamics of arbitraging process that normally happens during the trading of Rights.
Finally, if you were to decide to cut loss now (which I am not recommending), you would get back [20k x RM1.92] plus [20k x RM0.135] = RM41.1k. Judging by the way MAS-OR has been sold off yesterday, you may stand a good chance of success if you were to apply for excess shares. This would low the average cost further.
Hi David Ng,
ReplyDeleteYou are right about Latitud's SGX-listed subsidiary reporting a good set of results for 1H2010. A quick glance revealed the followings:
1. Net Profit attributable to Shareholders increased by 126% y-o-y to RM11.5 million. It increased by 175% over the preceding 6-month numbers.
1. Turnover increased by 15% y-o-y to RM77.7 million. It increased by 44% over the preceding 6-month numbers.
Latitude has yet to report its set of results for QE31/12/2009, which should reflect the good results of its Vietnam operation, which is housed in its SGX-listed subsidiary.
Hi MaxWealth88,
ReplyDeleteThe Gadang rights may suffer the same fate as MAS rights under the current market condition. However, Gadang Rights Issue is a bit generous as it is a 2-call Rights Issue (meaning it is "subsidized") and it comes with free warrant (1 for every 4 Rights shares applied for). I would think that Gadang rights may have more similarity to the Redtone rights which fetched a good price, but the share was left to sink.
Hi Alex, any comment on the Mudajya?
ReplyDeleteHi Cheer,
ReplyDeleteThat's a tough one! Would I like Roast Duck or Durian? Where should I begin?
Fundamentally, I prefer Dialog to MAS, because I do not quite understand MAS's business model. Technically, Dialog is still in an uptrend line, with support at RM0.90-95, while MAS is struggling to find a bottom. Can MAS hold at the horizontal support of RM1.90? If not, MAS may go to RM1.50 & thereafter RM1.00. However, I don't think we will see these extreme levels, even under the current bearish scenario.
In conclusion, MAS is 'cheap' but you need to hold it for a long while. Dialog is not 'cheap' but it is likely to continue to inch up, guided by its uptrend line.
thanks Alex for your comment. i notice in MISC the rights was also hammered when traded but now MISC is traded back above 8.
ReplyDeleteWould like to wish you Happy CNY!!
thanks
maxwealth
Thanks Alex.
ReplyDeleteGong Xi Fa Cai and best wishes.
HAPPY CHINESE NEW YEAR TO YOU, ALEX!!!!
ReplyDeleteHi Guys,
ReplyDeleteThanks for your well wishes.
Kong Hee Fatt Choy!
Hi Alex, thanks for your comment. It helps to make my decision, i decided to hold and register for the rights. I agree with your thought. I wish you a Happy new year. Best wishes for you and family. Hope you keep bringing more informative suggestions on your blog and do even better next year. I give my 110% of support! Safe driving home. Gong Hei Fatt Choy
ReplyDeletepower alex.. quite power in fundamental ,and technique as well
ReplyDelete