Sold KEURO-OR, switch to KEURO

Sold KEURO-OR at RM0.19

The free warrants attached to the rights shares has a validity period of 2 years. Assuming KEURO comes to RM1.50 in 2 years' times, with warrant exercise price of RM1.18, the warrant may come to RM0.30.

This values the OR at most 18 sen [3 sen (difference between mother share price and subscription price of 3 sen, closed 1.11 on 5 Aug 14) + 0.5 x RM0.30]

I like the potential in West Coast Expressway so decided to sell the OR, which I deem expensive, and switch to mother shares at RM1.11

Eg.

Let's say KEURO rise to RM1.60 in 2 years' time.

1) Buy mother share at RM1.10
Gain = (1.60 - 1.10) /1.10 = 45.5%

2) Keep/buy OR and subscribe
Cost = 1.08 + 0.18 = 1.26
Warrant price at expiry = 0.42
Gain = [1.60 + (0.5 x 0.42) - 1.26 ]/(1.26)
= 43.7%

Let's say KEURO rise to RM1.70 in 2 years' time.

1) Buy mother share at RM1.10
Gain = (1.70 - 1.10) /1.10 = 54.5%

2) Keep/buy OR and subscribe
Cost = 1.08 + 0.18 = 1.26
Warrant price at expiry = 0.52
Gain = [1.70 + (0.5 x 0.52) - 1.26 ]/(1.26)
= 55.6%