Mel
Picture this :
a) For any investor interested in buying into SHS (after the warrant issue is listed) it is cheaper for them to buy the warrants (at 0.085) instead of the main share (0.285). Assuming they have intention to convert them to shares (for whatever reasons, perhaps for dividends) the balance of 0.20 is a deferred liability and only contingent at the moment. After having bought the warrants (at 0.085) any increase in the price of SHS shares (very likely in view of very optimistic profitability growth from YE 31 Dec 14 onwards) would see a corresponding rise in the price of its warrant, e.g. if the price of SHS rises to 0.35 the price of its warrants would also rise to 0.15, hypothetically speaking. In essence, an investor with resources of $28,500 on hand could only purchase 100,000 shares @ $0.285 and be able to book a paper profit of $6,500 if it rises to 0.35. However, instead, if he had used the $28,500 to buy its warrants at 0.085 he would have obtained 335,000 warrants, and would have booked a paper profit of $21,775 in the same scenerio. This is the alternate reality for which warrants were created in the first place as a derivative product.
b) Assuming a vested investor, after having bought 100,000 SHS shares at 0.285 to receive his warrant entitlement of 50,000 warrants. decides to consolidate on the potential available to him, he could then sell all his SHS shares and use the proceeds to buy more warrants in the market. Example : Assuming there is no change in prices, he could then sell his 100,000 SHS shares (at 0.285) for $28,500 and obtain another 335,000 warrants (at 0.085)in exchange. His total holdings in warrants would have increased to 385,000.
An increase in the price of the motherboard share of, say 0.065 (to 0.35), would also result in the price of warrant to rise by 0.065 (to 0.15). His paper profit would have been 385,000 x 0.065 = $25,025. Had he not switched from motherboard shares into all warrants, his paper profit would have been 100,000 x 0.065 ($6,500) plus 50,000 warrants x $0.065 ($3,250) = total of $9,750. The paper profit differential would have been 60 % more had he switch everything to the derivative product.
This is, of course, a pro-forma projection based on present price statistics.
Last edit: 10 years 2 months ago by Aquarius. Reason: typo error
Aquarius wrote: Mel
Picture this :
a) For any investor interested in buying into SHS (after the warrant issue is listed) it is cheaper for them to buy the warrants (at 0.085) instead of the main share (0.285). Assuming they have intention to convert them to shares (for whatever reasons, perhaps for dividends) the balance of 0.20 is a deferred liability and only contingent at the moment. After having bought the warrants (at 0.085) any increase in the price of SHS shares (very likely in view of very optimistic profitability growth from YE 31 Dec 14 onwards) would see a corresponding rise in the price of its warrant, e.g. if the price of SHS rises to 0.35 the price of its warrants would also rise to 0.15, hypothetically speaking. In essence, an investor with resources of $28,500 on hand could only purchase 100,000 shares @ $0.285 and be able to book a paper profit of $6,500 if it rises to 0.35. However, instead, if he had used the $28,500 to buy its warrants at 0.085 he would have obtained 335,000 warrants, and would have booked a paper profit of $21,775 in the same scenerio. This is the alternate reality for which warrants were created in the first place as a derivative product.
b) Assuming a vested investor, after having bought 100,000 SHS shares at 0.285 to receive his warrant entitlement of 50,000 warrants. decides to consolidate on the potential available to him, he could then sell all his SHS shares and use the proceeds to buy more warrants in the market. Example : Assuming there is no change in prices, he could then sell his 100,000 SHS shares (at 0.285) for $28,500 and obtain another 335,000 warrants (at 0.085)in exchange. His total holdings in warrants would have increased to 385,000.
An increase in the price of the motherboard share of, say 0.065 (to 0.35), would also result in the price of warrant to rise by 0.065 (to 0.15). His paper profit would have been 385,000 x 0.065 = $25,025. Had he not switched from motherboard shares into all warrants, his paper profit would have been 100,000 x 0.065 ($6,500) plus 50,000 warrants x $0.065 ($3,250) = total of $9,750. The paper profit differential would have been 60 % more had he switch everything to the derivative product.
This is, of course, a pro-forma projection based on present price statistics.
sgx just give the green light for bonus wrt..expect to take place within this month...congrats
Aquarius wrote: Mel
This is a bonus issue and not a rights issue. Existing shareholders do not need to pay out anything to get their entitlement of warrants free of charge. They only need to make a cash outlay if they convert their warrants into share (at the conversion price of 0.20) They can choose to take their profit element without having to come out any cash for conversion by selling the warrants once they are listed. Technically speaking, once the warrants are issued to shareholders their warrants upon being issued and listed would have a market value of 0.085 (at the current price of 0.285 of its motherboard). The price of SHS is unlikely to go down because there is no dilution of total shares in the market at this point. Share dilution only happens after warrants are converted to shares.
Refer to Wee Hur warrants at the end of 2012. BBs push the mother price from 28 cents to 62 cents and they then converted Wee Hur warrants at around 20+ cents and reaped huge profit. Can refer to price movement of Wee Hur's warrants at the end of 2012 and the announcement of warrants conversion. So SHS warrants can draw parallel
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