Speculating on AEON

A  Pink Window of Opportunity

This is a rare window of opportunity not to be missed. So said my friend, Mr T.

What was he saying? He was speaking to me about this stock, Aeon.

In February, it was below RM 12.00.

Over the last three months, it has moved up slowly to above RM 14 before going down slightly by 50 sen to RM 13.50 somewhere in March.

It then crept up to RM 14.50 again before going beyond RM 15.50 in early April after it has announced its bonus and share split in February 2014. Very clean on a ratio of 1:1 before splitting into two 50 sen shares.

Falling a bit in early May, it has now trended the RM 15 level.

After yesterday'a AGM and EGM, the share is still trending at the same level.

Today it has just announced that it will ex-all on 28 May.

So, let us project whether someone who buys this share at RM 15.00 will make money or not if it goes ex.

He will first get 4000 shares of Aeon when the bonus is issued and the shares split.

The theoretical ex-scenario will be RM 3.75 per lot.

Let's assume that because the shares are now cheap and within the reach of most common men and is demand-driven , it will open  at RM 3.75++

Look at the following scenarios.

Scenario A: It goes up by 10% which translates to RM 3.75+0. 375 sen. This will amount to RM 4.12. So, if you have 4 lots, it means that your share is valued at  RM 16.48. (You stand to make RM 1,480)

Scenario B: It goes up by 20% translating to RM 3.75 + 0.75. This will amount to RM 4.50. Four lots will bring you RM 18.00. (You stand to make RM 3,000)

If by the end of this year, assuming each Aeon shares should rise to RM 5, it would mean that you would have an accumulated value of  RM 20.

If between now and December  2014 it has gone up by RM 1.25 , that would mean you have made RM 1.25 X 4 which will come to RM 5,000 for 6 months; meaning that the returns is RM 5,000 or  about 66% return to capital.

I guess that this will be an appropriate and happy scenario.

A scenario less than promising can still be encouraging if it is more than the current interest rate.

More will indeed be one big fat bonanza!