tag:blogger.com,1999:blog-935072059836759128.post5882916506398145929..comments2023-11-05T18:54:47.602+08:00Comments on Fusion Investor: RAMUNIA-LA: Another Mispricing?Senghttp://www.blogger.com/profile/08265958046623158053noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-935072059836759128.post-45315772742547182472007-07-11T22:50:00.000+08:002007-07-11T22:50:00.000+08:00I think Seng has done an excellent analysis. I hav...I think Seng has done an excellent analysis. I have been monitoring Ramunia for the past one month and bought and sold the shares (mother shares to be exact). The reason that I came across this blog is because I feel that the LA is priced below what it's worth based on the the mother share price. This prompted me to do some research online. After reading few articles, I come into conclusion that it's indeed a 1:1 conversion, which means that the LA or ICULS will be converted to the mother share come Dec 2007. I believe the main reason that it's lagging behind its mother share price is the dilution effect which will not only arise when the conversion happends, it's also happening as RAMUNIA holdings is issuing news shares for acquisition and private placement (not to mention ESOS + conversion of warrants). The aforesaid is the associated risks with the LA , but if one were to invest into the company for its growth propect LA is definately a better buy. A point to note is that back in Nov 2006, Sime Engineering was in negotiation with Ramunia to take the company private, one of the sailent point is that the offer price for the ordinary share is at 1.30 and it would also allow LA holders to convert the shares before the maturity period and accept the MO at the mother share price ( I guess this is one the developments that would counter any market correction etc). That is my one cent worth of thought ..Blogwormhttps://www.blogger.com/profile/14352787385329200935noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-23539446023398767602007-07-11T22:49:00.000+08:002007-07-11T22:49:00.000+08:00I think Seng has done an excellent analysis. I hav...I think Seng has done an excellent analysis. I have been monitoring Ramunia for the past one month and bought and sold the shares (mother shares to be exact). The reason that I came across this blog is because I feel that the LA is priced below what it's worth based on the the mother share price. This prompted me to do some research online. After reading few articles, I come into conclusion that it's indeed a 1:1 conversion, which means that the LA or ICULS will be converted to the mother share come Dec 2007. I believe the main reason that it's lagging behind its mother share price is the dilution effect which will not only arise when the conversion happends, it's also happening as RAMUNIA holdings is issuing news shares for acquisition and private placement (not to mention ESOS + conversion of warrants). The aforesaid is the associated risks with the LA , but if one were to invest into the company for its growth propect LA is definately a better buy. A point to note is that back in Nov 2006, Sime Engineering was in negotiation with Ramunia to take the company private, one of the sailent point is that the offer price for the ordinary share is at 1.30 and it would also allow LA holders to convert the shares before the maturity period and accept the MO at the mother share price ( I guess this is one the developments that would counter any market correction etc). That is my one cent worth of thought ..Blogwormhttps://www.blogger.com/profile/14352787385329200935noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-53439697210985977362007-07-03T23:27:00.000+08:002007-07-03T23:27:00.000+08:00I think the issue here is whether we are comfortab...I think the issue here is whether we are comfortable with investment in Ramunia.<BR/>If yes !<BR/><BR/>Then it is better to invest thru Ramunia-LA with added margin of safety of 26% discountgrahamsmunhttps://www.blogger.com/profile/02297314909202423784noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-79494135251057060252007-07-02T09:47:00.000+08:002007-07-02T09:47:00.000+08:00Dear totomaster,No, no, no ... I've never said Mr ...Dear totomaster,<BR/><BR/>No, no, no ... I've never said Mr Market will not adjust mother price near LA ex-date (20 Dec 07).<BR/><BR/>See my comment earlier to kcc above, where I mentioned there will be some dilutive effect, and provided some estimated prices after the dilution on 20 Dec 07. <BR/><BR/>The key question to determining profit (from buying the LA at $1.18) is what is the new mother price on 20 Dec 07 after dilution. That is an open question today, because you have moving targets. On one hand, there is dilution. On the other hand, there is the mother's business performance which is expected to continue to improve. My hypothesis is that the present 23% discount you are observing between the LA and mother is a bit too big (which is why I bought the LA at $1.18). In fact, mother price can come down a bit, and there is still profit opportunities. Profit is only lost if mother drops below the LA buy price. In my case, that's below $1.18. <BR/><BR/>Based on a report by Aseambankers which I recently had access to, apparently Ramunia has just completed a private placement of 45.5m shares at $1.20. This may explain why Ramunia recent share price fell from $1.6x to $1.4x. In the short term, price movements can be affected by many factors, and I have no doubt my explanation is only one factor. Notwithstanding that, the key question is whether you think mother share will fall to below $1.18 by 20 Dec 07 after dilution. <BR/><BR/>If not, and if you have a 20% p.a. target (or 10% return in 6 months), will mother price fall to say 1.18 x 1.1 = $1.30 by 20 Dec 07 after dilution (to achieve approximately 10% in less than 6 months)? If you think it is reasonably safe, then, there is a good chance that you will achieve your 20% p.a. profit target ... only you can answer this question for yourself.<BR/><BR/>I trust this is clear.<BR/><BR/>Regards,<BR/>Seng.Senghttps://www.blogger.com/profile/08265958046623158053noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-438615284646755892007-07-01T19:44:00.000+08:002007-07-01T19:44:00.000+08:00so wat makes u think Mr. Market will not adjust th...so wat makes u think Mr. Market will not adjust the mother price towards its ex-date?<BR/><BR/>thus, making the ICULS, ICPS & WA conversion looks fairly price. there is a reason y it has not moved to its FV so far...WK888https://www.blogger.com/profile/10784002781344707525noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-81761600866477776712007-07-01T11:46:00.000+08:002007-07-01T11:46:00.000+08:00I like the spirit of sharing here. Everyone brings...I like the spirit of sharing here. Everyone brings something to the table and you pick what you like, just like a pot luck party. I've been a silent reader all this while and benefitted a lot from all your sharing. Your input have certainly help a lot of people grow in their knowledge in eqiuty investments, expended our horizon. Most of us, if not all, still have lots of room for improvement in this field if we belive in continuous learning. We shared a common goals (I assumed) to learn from each other (more brain is better than one) to profit from the stock market. Thank you so much guys for your sharing especially uncle Seng. Learning and making money at the same time must certainly be fun. Let's enjoy it and don't take ourselves too seriously. Welcome differences - most important sources for growth and success, and make full use of it. Let synergize!Anonymoushttps://www.blogger.com/profile/12496856680344237703noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-55455670204237367522007-07-01T09:42:00.000+08:002007-07-01T09:42:00.000+08:00Dear totomaster,To me, one of the reasons why I th...Dear totomaster,<BR/><BR/>To me, one of the reasons why I think Ramunia failed to breakout, despite the general O&G sector breaking out, is the concern on Ramunia's large number of shares outstanding. The potential dilution is large, as you hinted.<BR/><BR/>But stock valuation is rarely one-dimensional. For example, you've used a P/E of 10 for an O&G stock. I wonder if you could recommend another O&G stock with a P/E of 10 at the present time. <BR/><BR/>In the backdrop of rising global demand and prices in the O&G sector, the profits of the sector has been booming. The escalation doesn't seem to be stopping, according to most analysts. Stock prices has also risen to reflect this. The question will always be whether stock prices has outran improved fundamentals. Using a constant P/E of 10 has a serious disadvantage in this context.<BR/><BR/>Notwithstanding this, my article focuses on the large LA mispricing, not the mother share. I trust my article DIDN'T claim that the mother has been mispriced in a large manner. The purpose of showing Aseambankers Target Price of $1.80 is to suggest that after 20 Dec 2007, there seems to be reasonable likelihood that Ramunia mother share may maintain its price within a reasonable band around current prices. The key question for all investors in the LA stock is whether the size of the band is smaller or larger than the entry price gap indicated by the LA.<BR/><BR/>To me, the nature of the LA is similar to a European Option with 6 months expiry. At $1.18, the market is valuing the LA option as not only worthless, but Mr Market is even willing to pay the holder a potential gain. In a large Options Market such as the US, such a large "negative premium" is very rare. The main point in my article is whether Mr Market is rational here (in terms of valuing the LA at negative premium)? If you think Mr Market is rational, then, best not to invest, but in my case, I think he doesn't seem to be acting very rationally, and so, I am taking a small punt here.<BR/><BR/>Cheers,<BR/>Seng.Senghttps://www.blogger.com/profile/08265958046623158053noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-85303189277331548242007-06-30T03:59:00.000+08:002007-06-30T03:59:00.000+08:00errmm.... fyi, there r 2 securites issued by ramun...errmm.... <BR/><BR/>fyi, there r 2 securites issued by ramunia, ICULS & ICPS... one being a loan stock and the other being a preference share, one will be converted 1 : 1 without incurring any charges and the other will be a top up of $0.50... <BR/><BR/>for the ICULS, it'll will be converted to mother 1 : 1 FOC (some might say)... :)<BR/><BR/>by end 2007, there will be an additional 164 million RAMUNIA (ICULS) shares flooding the market... diluting it big time... by 2009, another 64 million RAMUNIA (ICPS) will come in again... by 2014, again another (hopefully will be the last) 237 million RAMUNIA (WA) coming in.... blardee hell 700 million RAMUNIA shares in the market... <BR/><BR/>some say an issue is on da way (guess its not the last dilution)... hmmm... <BR/><BR/>of coz.. unless RAMUNIA does miracle and increase its profit in a big way, else u will see peanuts...<BR/><BR/>Lets say at current, annualized profit @ ~ RM32 million, 238 million shares @ RM1.43... PE is around 10x<BR/><BR/>After Dec 2007... RAMUNIA has to make a profit of ~ RM56 million to stay at the PE 10x... by 2009 ~ RM64 million & by 2014 ~ RM100 million... fuiyoo...<BR/><BR/>so end of the day... can a long term idea work on RAMUNIA? u think RAMUNIA can do some kind of "magic" trick to boost its profits? <BR/><BR/>hey guys... just for discussion sake... i might not be wrong but i'm not always right... :)WK888https://www.blogger.com/profile/10784002781344707525noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-80359046977630833812007-06-29T09:57:00.000+08:002007-06-29T09:57:00.000+08:00Dear all,Thanks for your prompt comments. I'll add...Dear all,<BR/><BR/>Thanks for your prompt comments. I'll address each of your comments below.<BR/><BR/>zen, kcc,<BR/>This is the million $ question. In this situation, I would like to think that the most reliable source should be Bursa and the Company Annual Reports, not the Edge, the Star, SinChew or any other newspapers ... newspapers are known to be occasionally wrong in their reporting. I do note Ramunia par value is $0.50 though, but it doesn't say anywhere in Bursa nor Annual Report that there is an "exercise price" or a "conversion price" of $0.50. This is a possible risk, but in this case, I think the newspapers are likely to be wrong (but I cannot eliminate the possibility that maybe there is a tiny chance that I could be wrong!). Certainly, do always consult your brokers as they are the professionals. If they refer to newspapers instead of Bursa, then, I suggest you to fire them immediately. :-)<BR/><BR/>juicy,<BR/>Personally, I seriously doubt this since RAMUNIA-LA is mostly equity and has a tiny debt component. At least, that is evident in the Balance Sheet. I'm not as confident as you are that the LA will "miss out". But if you do feel this way, then, better not to invest.<BR/><BR/>ccdev,<BR/>That's true, and it's a calculated risk. I note that current shares outstanding is 285m at $1.45. The proposed rights issue is 68m at $1. Private placement 46m at $? (either $1.45, close to that, or $1? ). Taking a prudent scenario that potentially 114m shares could be placed at $1, then, this gives a new diluted price of (285 x 1.45 + 114 x 1) / 399 = $1.32. <BR/><BR/>If the private placement is done close to market price of $1.45, then, the new diluted price is $1.37.<BR/><BR/>Both prices are still higher than $1.18 yesterday.<BR/><BR/>But if one likes Ramunia, is it better to enter via mother right now at $1.45, or via LA at $1.18? It seems to me the LA is still the cheaper way of entering Ramunia, if one has a long-term horizon.<BR/><BR/>Of course, another way is to simply wait for the share price to fall ... and takes the risk that the share price might not fall to your target level and so one misses out. That's very acceptable too.<BR/><BR/>kcc,<BR/><BR/>Yes, there will be a dilutive effects when additional 164m LA shares comes in ... The effect will be mother price comes down after Dec 20. Using current prices, one estimate of the new mother price after dilution may be from $1.37 above to $1.32 (or from $1.32 above to $1.28.) This assumes mother at $1.45 and LA at $1.18 face price.<BR/><BR/>Yes, I think it's worth a small bet too (certainly, not more than 5% of one's stock portfolio) since the company and the industry (O&G) long-term prospects over the next few years seem promising. In terms of considering which is the cheaper entry, it still seems to me the LA is still the cheaper entry as of yesterday ... <BR/><BR/>Thanks all,<BR/><BR/>Seng.Senghttps://www.blogger.com/profile/08265958046623158053noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-26246677778483534402007-06-28T23:34:00.000+08:002007-06-28T23:34:00.000+08:00You might want to consider the dilutive effect whe...You might want to consider the dilutive effect when ICULS conversion takes place. Shouldn't be a problem if prices are much higher by Dec. but mother might come down in Dec in anticipation. Worth a bet though especially if you believe in its long term prospects.<BR/><BR/>I think your reading is right and the 50sen conversion price is satisfied by the 50sen nominal value of each ICULS.dvdhttps://www.blogger.com/profile/07695360425121492958noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-3665722109910417952007-06-28T21:19:00.000+08:002007-06-28T21:19:00.000+08:00Seng, I reached the same conclusion as you that th...Seng, I reached the same conclusion as you that there is no conversion cost for the LA from reading the Bursa announcement. <BR/><BR/>Just to be sure, I checked The Star business section, and lo and behold, the ex-price for Ramunia-LA is stated as 0.50 !!<BR/><BR/>I referred to SinChew, and the "conversion method" is stated as 0.50LA, which when compared with other ICULS, I interpret it to mean conversion price of RM0.50<BR/><BR/>So which is right? Where to get final confirmation - write to Ramunia or talk to our remisiers ?Caseyhttps://www.blogger.com/profile/17798191554825981833noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-831579595583972312007-06-28T17:21:00.000+08:002007-06-28T17:21:00.000+08:00bro, noticed that ramunia is considering a restric...bro, noticed that ramunia is considering a restricted rights issue. If that happens, mother share price will be adjusted downwards but LA will stay the same. That is a risk, right or am i missing something?ccdevhttps://www.blogger.com/profile/12179604373814061892noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-72809154172010462152007-06-28T16:24:00.000+08:002007-06-28T16:24:00.000+08:00what happen when Sime take overRamunia say at 1.60...what happen when Sime take overRamunia say at 1.60. LA will<BR/>miss outjuicyhttps://www.blogger.com/profile/04876740163357345983noreply@blogger.comtag:blogger.com,1999:blog-935072059836759128.post-59370088979513319592007-06-28T16:22:00.000+08:002007-06-28T16:22:00.000+08:00seng, I read in the edge newspaper, its conversion...seng, I read in the edge newspaper, its conversion price is 0.5 , What does it mean? Is it 0.50 sen ?zenhttps://www.blogger.com/profile/10292985577277892247noreply@blogger.com