Sunday 10 June 2018

Golden Arbitrage Opportunity in YONGTAI-PA

YONGTAI closed at RM1.52 while its Irredeemable Convertible Preference Share (ICPS), YONGTAI-PA, closed at RM1.14 last Friday.

Profile of YONGTAI-PA can be found here.

The ICPS holders shall have the right to convert the ICPS into new YTB Shares based on the Conversion Price, at the option of the ICPS holder, at any time on any market day from 28 November 2019, being the 3rd anniversary of the date of issue of the ICPS, up to and including the Maturity Date.

Each YONGTAI-PA can be converted into one YONGTAI ordinary share from 28 November 2019 onwards, at the option of ICPS holder (not issuer). No additional cash payment is required for the conversion.

On dividend, 

The Company shall have the sole discretion to decide whether to declare any non-cumulative dividend and the quantum of such dividend, provided always that if dividends are declared to its ordinary shareholders, then dividends in respect of the ICPS shall be paid to the ICPS holders in preference.

If you are a YONGTAI shareholder and you intend to keep the shares for medium to long term investment, at least for 1.5 years, there is a golden arbitrage opportunity.

Sell YONGTAI shares and buy the same amount of YONGTAI-PA concurrently. Convert YONGTAI-PA from 28 Novermber 2019 and you will get back the same amount of YONGTAI ordinary shares. 

Based on last Friday's closing prices, for every 1,000 YONGTAI shares, you can bring down investment cost by RM380 (before transaction costs). That's more than 20% "instant gain".   

It sounds too good to be true.

YONGTAI-PA has a 30-day average daily volume of 214,036.

Encore Melaka is set to have its maiden performance on 1 July 2018.

According to UOB's report dated 31 May 2018, out of 1.4m annual seat capacity, 1m tickets have been taken by 6 local and foreign travel agents for the next 3 years, commited under offtake agreements. This represents a 70% take-up rate for the theatre based on 2 shows daily, at a 2,014 seat theatre.

Travel Agent
Target Market
Majestic Express Holidays
Apple Impression Holiday
Levingo Travel
Shanghai Ctrip International Travel Service Co
Coachliner 707 Travel & Tour
WTS Travel & Tours

1 comment:

  1. I sometimes read some new articles if I find them interesting. And I found this one pretty fascinating and it should go into my collection. Very good work!
    Bursa Malaysia Stocks