The Fall and Fall of Felda Global Ventures

Falling FGV

I did.

Believe me I did as a Malaysian patriot!

I applied for FGV's IPO.

It was 6.75 times over-subscribed.

As, I usual I failed.

Now this politically-driven share has gone down from its high above RM 5.00.

It is sliding and coming closer to its issue price of RM 4.45.

At the current going price of RM 4.75, those who bought the share at the IPO will stand to gain 30 sen or RM 300 gross.

After deducting RM 31.00 for brokerage etal, you will stand to gain a net profit of  RM 269.00

If it fell to RM 4.44, it is hell water and you must get out without a loss of a whisker!

Now that the elections is not yet called, it may be pushed up for scenario building.

You may want to get out when they do a number on the counter.

Two Visually Awesome Sights

This is truly breath-taking.

Superb Shot

One,the Barcolana  regatta sailing contest in full swing in front of the Trieste Harbour  in Italy. Almost subliminal!

Deep Leap

The other, one month's pursuit to break the sound barrier. Felix Baumgartner exits the capsule to begin his 

 record setting 37 km skydiver Roswell,New Mexico on 14 October 2012.

Love for Stunts

Felix is a known Austrian daredevil skydiver who by nature loved to perform dangerous stunts.

At the time of writing, he is still in descent.

Creating Mr Unemployable

Wait some more....

The dastardly education system is to be blamed somehow.

We have many job-seekers out there who are sadly, unemployable.

The lack skills.

They lack talents.

They cannot communicate well in English.

Worse, they demand high pay.

No wonder they are still begging for a job.

Are you Malaysians proud and stupid-the bodoh sombong kind?

Tepuk dada,tanya selera!

The Raiders of the Lost Friendster

Malaysian OnLine (MOL) Group was the one that made a raid on Friendster and won the ownership of the company from such competitors as Facebook. After shifting the company to Asia, it milked the membership database and moved it to MOL. MOL then became a gaming portal that achieved tremendous sales from the Philippines to Indonesia,

Subsequently it sold patents to Facebook for a portion of its share.

When Facebook listed they saw the value of their shares soared to RM700 million.

The man that who helped Vincent Tan to do magic was Ganesh Kumar Bangah.

Hitting the Excess Trail for YTL Power Warrants

Is it worth it?

There are many who would venture to gamble on obtaining additional shares through the excess shares application route.

Remember there are rules that you need to abide by if you want to make it a successful outing.

The rules of distribution is determined by the Board of Directors (BOD).

In the case of the distributions of excess warrants for YTL Power, the BOD has decided on the following criteria:

Will you get what you applied for?

Firstly, to minimize the incidence of odd lots.

I am not very sure whether odd lots means in 1000 units or the 100 units tradeable lot. I think they likely mean the latter.

So, if you have 10 shares and applied for 90, you will likely get it.

Secondly, they allocate according to your shareholdings when the offer was made based on a pro-rata rate but subjected to the maximum you applied for.

Assuming you have 20,000 shares in YTL Corp when the offer was made, they will use this shareholding and pro-rate the excess shares to you. Let's say the BOD approves 50% of whatever you hold subject to the maximum you applied for.So, when you are entitled for 200,000 units of YTL Power warrants, they could offer you 100,000 units.

Thirdly, they could give you according to a pro-rata of the excess units that you have applied. This is a more subjective approach  of fixing a formula of the units you applied for. If the BOD should decide to give you 10%  of 50000 units, then they will just offer you 5000 units.

Playing excess shares can be rewarding for good companies.

I wonder who actually bought the excess shares for Dijaya?

There must be a reason for doing so, because you can buy it so much cheaper from Bursa KL. Buying rights will already bring you losses, why magnify if more painfully with excess.

Leap of Faith-Gangnam Style?

Power to Generate Cash for You?

Yes, I am talking to all of you, YTL Corp shareholders who did not sell your ROS option forms for YTL Power warrants 08/18.

I may be wrong but YTL Power warrants is mainly held by YTL Corp (some 95% if I am not wrong).They can selling it to all shareholders of YTL Corp who held sufficient units on 2 October 2012 on a basis of  1 unit for every 15.

What was its original cost in 2008. A mere 10 sen.

Cash Transfer to You?

So, my guess is all that was sold (almost) has been Treasury-bought by YTL Corp. YTL Corp may have bought it at about 15 sen, that is my surmise.

So, the 5 sen offered is holding cost.

It has been 4 long years and the warrants have been collecting dust in the vault of the company. Now, they want to cash it out at the cheapest cost-Gangnam Style.

At almost 50 sen per traded YTL-Power warrant, 20 sen was cheap. It has fallen.

So today, it is at 41.5 sen, a 48% discount gross. Why?

Minority shareholders, fearing a deluge or a stampede of sellers getting steep-discount warrants are throwing them out at a profit of RM 0.21 sen gross.

My guess is these buyers are not retail buyers. The likely buyer again are Treasury buy-ins from YTL Corp or YTL Power.

So, now that you are saddled with the ROS form to subscribe for the 20 sen warrant discounted to you by 21 sen or net 17 sen market price, what is your decision?

Leap of Faith-Gangnam Style?

To buy or not to buy?

A quandary. So, do you fee like Hamlet now?

Let us do our final scenario building and look for the darkest one versus the brightest one and also the median picture.

 They say bad feedback is good for you. So, here we go.

You are not in the money at all if the YTLP Warrants are priced at RM 0.25.

Risk spread.

At current 41.5 sen, [ if it stands firm], you will stand a chance to sell it at RM 16.5

Median scenario. YTLP warrants fell midway to RM 0.34 sen. when you sell, you will obtain 9 sen

Worse scenario model for me-the warrants trades at 25 sen.

Let us build up the best scenario, and median scenario where a shareholder wants to subscribe for all of his or her 60,000 units offered.

Cost of funds:

Outlay: RM 12,000

Bank Draft: RM 5.00

Stamp duty : RM 10.00

Total:  RM 12,015

Best scenario:

60 lots x 41.5 =  RM 25,200

Deduct for overhead : RM 209.96

Net payout: RM 24,990.04

Deduct for full expenses: RM 24,990.04- RM 12,015 = RM 12,975.04

Return: 107.99% return (Positive)

Median scenario:

60 lot x 340 =  RM 20,400 gross

Deduct for overhead : RM 169.92

Net payout: RM 20,230.08- RM 12,015 = RM 8,215.08

Return: 68.37% (Positive)

When it touches almost quicksand and hand-trembling  RM 0.25 sen, this will be the scenario.

60 lot x 250 =  RM 15,000 gross

Deduct for overhead : RM 124.50

Net payout: RM 14,875.50- RM 12,015 = RM 2,860.5

Return: 23.80% (Positive)

Get out before it goes down further!

Otherwise, Hades will smile hell-fire at you!!

Currently, I see a support price of the warrants at RM 0.40 sen.

I hope that this will be the traction point to attract subscription which will close on 17 October 2012.

After that, YTL Corp must hold on to maintain its goodwill.

A 24-sen price level is actually dead-meat for YTL Corp!

Remember, this exercise cost money to YTL Corp.

If they cannot dispose their holdings of YTLP warrants via this subscription exercise, they will just have to shelved it as there is no underwriter for the offer.

So, what do you think?

For those reading my post, this is not a solicitation for you to buy into the warrant subscription.

Caveat Emptor!

Caveat emptor!

Tumble-down Thursday at the Bourse

Dead Duck Day

Maybe it is Wall Street as usual than spook buyers.

May be its Spain's sovereign downgrade to BBB-

Maybe it is a fall in Japan's manufacturing output.

Whatever, Bursa KL  was sent to the ICU.

Except for a few brights parks like Pharmaniaga, most counters took a dive into the Red Sea.

Tee Hee!! The Bear Drubs the Bull

Tomorrow is Friday. Expect worse.

For me, I am keenly looking at YTL Power, YTL Corp and Digi.

In spite of an analyst call for a downplay on telcos, I believe the competition for prepaid cards which has been started by Digi has seen competitive counter offers from Celcom and Maxis. I expect more upside for telco counters such as Digi, Axiata and Maxis.