^V^
Take a look at YTLPOWERWR @0.55 ^V^ Y this warrant is good to enter ? what is d risk n goodies of buying this warrant ?
Well...
This hv to come back 2 d fundamental of how to calculate d value of warrant.
There r 3 factors u must take into consideration B4 u jump into any warrant !!
1) Expiry date of d warrant ( must be at least 3 years n above !) Y must be 3 years n above ? ..d answer is simple..refer to those call warrants esp those china call warrants that u bought last year, how it is now ? ALL LANDED IN holland ??
2) D future prospect or future earning of its mom
3) In or out money of d warrant .
90% of d ppl who bought warrant usually sell it b4 d expiry date , like what we bought ijmwb @0.38, I am very sure 99.99% of u guys hv disposed it last year , am I not correct ?? d longest the warrant is d better value it is , know why ? it is bcos of time factor n interest that u save ! cos u only need to convert it in year 2018 ( this case is for YTLpower wr ), its mom is now stood at 2.10 n yr cost is only 0.55 + 0.10=0.65 , u save 1.45 b4 d conversion date (2018), calculate how much u save if u put RM1,450 as FD for 10 years !!! this is called time factor ^V^
2) Future prospect of its mom (YTLpower ), u can see from d attachment , its average eps 4 past 3 years stood around 0.22cts which giving u p PE @ 10 at current price of 2.10 ! dont 4 get, ytlpower is cash kow blue chip ! a cash kow blue chip selling to u @ PE10 is relatively cheap ! ask yrself , what ytlpower going to be in next 5 to 10 years ? or make it simple, will there be any bull run in next 5 to 10 years ?? make it more simple lah.. is 2.50 is that difficult 4 ytlpower to reach in next 5 years ? ( she dropped from high of 2.80 last Dec 07 ) .
3) OK..since 2.50 is sup sup sui to achieve in next 5 to 10 years... let calculate d value of this warrant , in or out money ??
as known to u guys, 4 a warrant to be classified as in money , its PREMIUM (X CIMA Weng )must not be exceeded 30% . now calculate yrself d premium of ytlpowerwr @ 0.65 :-
Yr cost 0.55 + 0.10
conversion price = 1.25
expiry date 10 years
mom = 2.10
0.55 + 0.10 +1.25 - 2.10= (0.20 or with discount of 9.4% * 0.20/2.10 x100%= 9.4%*) it is discount by 10cts ! dont 4get d time factor as i mentioned above !
Look at YTLpower wa = 0.86 , conversion price =1.35 , expiry date =8/1/2010 ( less than 2 years)
0.86 + 1.35 - 2.10 = 0.11 ( 0.11 / 2.10 x 100% = 5.2% premium )
Let make a comparison, YTLpowerwr giving discount of 9.4 % with 10 years time frame as compared to Ytlpowerwa with premium 5.2% but going to be expired in less than 2 years !
Based on < 30% premium calculation, Ytlpowerwr will only be out of money if its mom fall below 1.50 which i think is quite unlikely .(1.25 +0.10+0.55 -1.50 = 0.40. 0.40 /1.50 x 100%= 43% ) ,
See d gem ??
Shortfall of buying YTLpower warrant right:-
1) In bear mkt, warrant usually drop greater than mother shares in term of percentage.
2) Its base is too huge, not easy to move up.
3) very troublesome , u need to buy a bank draft n post it to d registra ( may be this is their trick also , thus, nobody willing to take all d trouble to buy its warrant right so that they can sapu as many as possible, lazy bird cant get worms)
FYI, I hv bought in 30lots @0.65 this morning , follow or not ? u decide ^V^
Btw,Fund control risk is needed b4 u jump in n also be prepared to hold 4 long term if mkt goes againts u ^V^
***
Flag this message^V^Take a look at YTLpwr-wr@0.55 ^V^Monday, May 26, 2008 3:08 PM
From: This sender is DomainKeys verified "LIM Thow Take"
Guys, take a look at ytlpower warrant right @0.55 , I hv bought in 30 lots @0.55 this morning , d said XXXX that i swap from bjcorp to bjcorplc is actually ytlpowerwr .
I will do a write up in my blog 2molo.
b4 u jump in , dont 4get to monitor yr fund control risk !
SAMGOSS
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--- On Mon, 5/26/08, LIM Thow Take
From: LIM Thow Take
Subject: Re: YTLpwr-wr
To: "XXXXX
^V^
Bro, thanks 4 yr alert but this is not d way to value warrant ^V^
First , u must calculate d time factor n d interest saved from buying warrant esp warrant with 10 years time frame.
2) it is traded with premium 10% discount, way below that "30% In money requirement "
3) Future earning prospect of its mom (blue chip )
4) dont forget also, those who convert their warrant to mom, they do hv their cost also , they need to pay 1, 350 + their warrant which cost them 650, as for those who get its warrant right free , most of them bought it @ > 2.50.
Do u know what is d premium level when i first bought my IJMwb @ 0.38 ? it was traded @ 20%premium at IJM 4.50 , ( bear in mind, anything below 30% is considered in money for warrant with d condition of its expiry date must be more than 3 years ).
It has very strong support at this level , make it simple.. what do u think blue chip like ytlpwower going to be in next 5 to 10 years from now ? or may be u should think of is there any bull run in d coming 10 years ? i dont think ytlpower will stay as it is in next 5 to 10 years ^V^
D question now is how low she can goes ?
I Bought 30lots @0.55 this morning .(fund from swap of bjcorp n bjcorplc )
I will do a write up on warrant in my blog when i am free.
SAMGOSS
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--- On Sun, 5/25/08, XXXXXXXXXXXXX> wrote:
From: XXXXXXXXXXXXXX>
Subject: YTLpwr-wr
To: "Sam"
Date: Sunday, May 25, 2008, 12:27 PM
Bro, Thanks for highlighting this counter. After study, everything looks convincing except follow: Fund manager is worrying dilution effect of additional 2.2bil warrants. That's the reason why YTLpower drop in past few days. The selling pressure may continue. see this: Current market capitalisation = RM2.11 x 5.3bil paid up = RM11.2bil Potential diluted capitalisation = RM11.2bil divided by (5.3+0.8+2.2)8.3bil shares = RM1.35 only As you informed you will go in on Monday. My suggestion go in stages, more selling pressure is possible due to dilution of NTA per shares. This is the worry of the current institutional investors. Any comment?
