Chart 1: Hapseng's daily chart as at April 14, 2011_11.00am (Source: Quickcharts)
Chart 2: Hapseng's weekly chart as at April 13, 2011 (Source: Tradesignum)
Some investors may still be excited about this stock as it has proposed a corporate exercise involving bonus issue as well as rights issue (with warrant). However, I believe that the main reason for the sharp price run-up in late 2010 was the rumor of a privatization of the company. I believe the idea of privatization (if ever there was one) may have been shelved due to the sharp price run-up. I based my belief on the fact that the company has proposed a bonus issue- something which you wouldn't undertake if you are seriously contemplating a privatization as bonus issues tend to price positive.
hi alex,
ReplyDeletewhat do you think abt Hap Seng as a long term investment?
thanks
maxwealth88
Hi Alex
ReplyDeleteHapseng current share weakness could be due to private placement of 20% through book building. Generally, private placement share give up to 10% discount than average 5 day weight market price.
Hapseng share price likely continue on weakness before the actual price of its 20% placement is confirm as potential institutional investor will opt to sell share in the open market and then enjoy discount through book building exercise
As far as i know, the is no announcement yet on the completion of private placement and its price on bursa. I think to book building could be on the way soon.
About its subsequent bonus, right and warrant, ex-all price could be lower down and is somewhere around 1.90 and if management insist on its discount of 35% on its right share, then right will be at 1.25. or else it would follow the earlier proposal issue right at 1.46. Its warrant could be trading at premium at least 30% depending on its warrant exercise price.
Its final dividend of 22sen TE is based on its current share capital of 622.6m, after the corporate exercise, its share capital will be increase to 2.689b, which imply the shareholder only entitle about 5.1 sen TE
are they still doing a right issue at 6.50 ? ...lol
ReplyDeleteHi Alex,
ReplyDeleteCan you comment on the Penny stock GSB Group Berhad (7077)?
Regards
Zen
Hi Alex,
ReplyDeleteWhat is your opinion on TSM, after its failed breakout this month? A number of investment banks have lowered their forecasts on the local automotive sector, due to parts supply issues from Japan.
Thanks!
Hi MaxWealth88
ReplyDeleteIf we invest too much for long term, we are going to be dirt poor today & next year. Hapseng has not been to the current price territory for the past 17 years. I say 17 years because that's how long I have been in this business. A period of 17 years is slightly more than 2 investment cycles. Having said that, one may ask why has it gone up so much. It must be something fantastic. However, we must not be too seduced by the possibility that we forgot the most crucial point in any investment- are we going to make profit in this stock? Has the price run-up factored in the possibility? If it has, then there is little to make & everything to lose by going into a highly priced stock.
Hi hng
ReplyDeleteYou made an interesting point about the current price weakness and the price determination for the private placement. If you were one of the placees, you would be very uncomfortable putting money into a stock that doubled in less than six months. The drop in the share price would make the private placement easier to do. Even after the current correction, Hapseng share price is still fairly lofty. The company must have a pretty interesting spin to entice funds managers to invest in this stock.
Hi juicy
ReplyDeleteI think the issuing price of Hapseng's Rights Issue has not been fixed yet.
Hi AlexP
ReplyDeleteTSM is struggling to stay above its uptrend line support at RM1.70-1.75. A break below this level will be bearish for the stock. Since early March, it has broken below the uptrend line on more than 5 occasions but the breakdown was backstopped by the horizontal support at RM1.60-1.65. Would the next breakdown see support at RM1.60-1.65?
I am not sure about the implication of the recent earthquake & tsunami on auto parts supply & demand. If a company supplies auto parts to secondary market, I guess the impact could be either negligible or positive (due to the substitution effect). If it is a OEM producer, the impact is hard to estimate. It could be positive (due to the substitution effect) or it could be negative if the production of automobiles are affected & the demand of its parts are affected.
Hi Zen Chai
ReplyDeleteI am not familiar with GSB. It is a smallish company involved in replication of optical discs and property development. Its topline & bottomline jumped in FY2010 due to property development. Everybody seems to be jumping into property development- and we know that when everybody does the same thing, chances are it will turn bad one or two years down the road.
Chartwise, GSB has good support at RM0.07 & strong resistance at RM0.085. Like many penny stocks, GSB seems to be on the verge of entering into a rally.
Good luck!
HI Alex
ReplyDeleteRinggit at 4-week low on US debt fears http://www.btimes.com.my/Current_News/BTIMES/articles/20110419092951/Article/index_html#ixzz1JxkFHC6p
Buy call for glove now with above news ???
HI cheer
ReplyDeleteWeaker USD is not good for exporters. That applies to rubber glove producers as well. So, it is not a sign to buy into rubber glove sector.