There was speculation galore in the street rumours as well as market punters on how Francis will shore up prices.Some thought YTL will be considering strategic M&As buy-ins. Yet, until the EGM on 14 April, there not a squeak from Francis. So what gives?
Every one knew that YTL has one of the biggest cash horde on this side of the non-GLC corporate world. At that time, its cash reserves was a whopping RM10 billion, far more than Genting Malaysia's RM 2 billion.
At the EGM, Francis informs the meeting that now their cash reserves have gone up to RM12 billion! He added that the last two years were not good years for M&As. And most offers were too expensive to consider. If none appears on the horizon soon, YTL may just consider buying up more shares in its own strategic subsidiary, YTL Cement which is moving very close to the RM5 market price.
After long month of dull and listless trading, YTL shares finally rested at the RM7.20 price level for the issue of the share-split documents to its shareholders.For every existing RM50 sen share, 5 sub-divided shares at RM0.10 will be issued. This puts the ex-price of YTL at RM1.42 per share.
On 26 April 2011, YTL shares will be traded ex-split offer. The last date of lodgement is 28 April 2011.
As such, all shareholders will have YTL new shares deposited in their CDS account on 29 April 2011. However, those who want can start selling their new shares beginning 26 April 2011.
Here is an example taken from its announcement to Bursa.
"For example, if Mr X purchases 100 YTL shares on cum basis on 25 April 2011, Mr X should receive 100
shares on 28 April 2011. As a result of the share split, 500 YTL shares will be credited into Mr X's CDS
account on the night of 28 April 2011 being the Book Closing Date. Therefore, Mr X can sell the share
split shares of 500 on or after the Ex-Date ie from 26 April 2011 onwards."
Last Thursday when it held its EGM, YTL shares moved up 20 sen to RM7.45. On Friday which is a dull listless days on most markets, YTL bucked the trend to settle down at RM7.72 for another 27 sen gain. Now that the date of the ex-split is out, there is buying pressure to grab the mother share. It went up as high as RM7.99 in the first hour of trading this morning and settled at RM7.94 for another 22 sen gain.
From the buying pattern, it looks like either big funds are not here or they are taking small bites before the shares go ex. I believe the current 2.263 million shares traded today are mostly from small retail players except for a few chunks of shares at 300 lots and one 500 possibly coming from institutional investors.
The counter closed at RM7.90 for an 18 sen gain.
My Take:
I believe that YTL shares are under valued. I believe it is tightly held. I do not know who is throwing out the shares just before its ex date.
But I can foresee one scenario. It the shares go beyond the psychological RM8.00 mark, many local fund managers will move in. I believe long term investors such as PNB, Khazanah, EPF, SOSCO, and the Pension Funds are getting in now. If foreign funds should come in, do not be surprised to see YTL shares shooting past RM2.00 ex.
It will certainly pump up the fever and the pressure when feeding frenzy starts. By then it may just be too late to get premium profits.
You know what I mean?
