Tuesday 22 May 2012

Arbitrage Opportunity in LEADER

This is hindsight.

Wayne W. Dyer said Hindsight wisdom is of no use.

But, I am posting this as someone whose hindsight could become your foresight.

There was an arbitrage opportunity (risk free profit) in LEADER lately.

Leader Universal Holdings Berhad is being privatised at an offer price of RM1.10 per LEADER share, of which the cash consideration was made up of 35 sen net special dividend and 75 sen of capital repayment.

To get a net dividend of 35 sen and as the special dividend was paid from retained earnings with Section 108 tax credit, the franked dividend amounted to RM0.467.

The share went as high as RM1.10 before the ex-date. Based on current closing price of RM0.745, how much would an investor with 0% income tax bracket earn if he/ she bought LEADER at RM1.10 right before ex-date and sold at say RM0.74 a share after ex and within contra period?

Profit = RM0.35 (net dividend) + RM0.117 (section 108 tax credit) + RM0.74 - RM1.1 - brokerage) x no of shares

Assume buy-sell brokerage fee of 1 sen,
approximate return in about 1 year time, after refund from IRB = (11.7 - 2) sen/ (2 + 35/12) sen = 197.3%!

Say if one falls in income tax bracket of 12%,
approximate return in about 1 year time, after refund from IRB = (6.07-2) sen/ (2 + 35/12) sen. Still a handsome 82.8%!

Note: 35 sen dividend would be distributed within 1 month from ex-date and using 35/12 as time factor to calculate the % of return.

Friday 18 May 2012

Facebook IPO at US$38

Facebook Inc. priced its shares at $38 per share for an initial public offering that would make it the most valuable U.S. company at the time of IPO.

At $38 a share, Facebook is valued at $104 billion or about RM320 billion. This is substantially larger than Maybank, the biggest listed company in Malaysia which has a market capitalisation of about RM65 billion.

At this price, Facebook is worth as much as MAYBANK + SIME + CIMB + PCHEM + AXIATA + MAXIS

Facebook's 1Q2012 net profit was USD 205 million. Annualise the first quarter earnings, facebook is valued at three digit P/E ratio of more than 100 times...

Saturday 12 May 2012

Political Illiterate

Why post something about politics in a blog that talks about stocks, investment and finance?

"He doesn't seem to know that the cost of living, the price of beans, of flour, of rent, of medicines, (performance of stock market), all depend on political decisions."

Picking the right party into power largely affect the performance of stock market.

Where would the FBMKLCI be now if the country is led by a leader like Lee Kuan Yew?

Saturday 5 May 2012

Calculating Theoretical Ex-All Price (TEAP)

MBM Resources Berhad is issuing:

i) 3 bonus shares for every 10 existing shares held
ii) 3 rights shares at RM1.42/ share for every 10 existing shares held
iii) 3 free warrants for every 10 existing shares held

All the above go ex on 21 May 2012.

For the avoidance of doubt, the bonus shares to be issued pursuant to the proposed bonus issue will not be taken into account in determining the rights shares and with warrants to be issued to the entitled shareholders

How to calculate the TEAP?

Click on the image to enlarge

Say based on the closing price of RM 5.24 on 4 May 2012, the TEAP would be RM 3.48 (round down)

The share price given in the announcement dated 2 May 2012 was RM 4.96, so the TEAP given was RM3.33


The third terminal, with a 1.5km wharf, is expected to cater to an annual capacity of three million twenty-foot equivalent units (TEUs) of containers.

The development cost is expected to be around RM1.5 billion.

The terminal will be designed to cater to ultra-size modern container ships such as the Triple-E, which is the world's largest and most efficient container vessel with a capacity of 18,000 TEUs.