During the lunch break, MITRA proposed :
i) one-into-two share split
ii) after split, bonus issue of 1 share for every 2 shares held
iii) free 1 warrant for every 8 shares held
The stock is suspended from 230pm until 330pm today.
My view:
At the first glance, it seems like everything is free. Normally, bonus issue is enough to influence share movement upwards. This one is 3 in 1!!! Split + Bonus + Free Warrant! Where to get? I think RM2.00 should serve as the ceiling for the stock for the evening trading based on: i) psycological ceiling, ii) historical PER of 6.21x. If MITRA can break RM2.00, then RM2.20 shall be the next resistance.
A closer look however shows that MITRA has warrant which will mature on 12-Feb-2011 with the last date of exercise is 11-Feb-2011 5pm (Friday). The exercise price for this warrant is RM1.80 and is convertible into mother share.
If you are a warrant player, calculating the fair value of MITRA-WB is quite straight forward, just minus RM1.80 from the mother share assuming 0 time value for the warrant. E.g. if mother share is RM2.00, then MITRA-WB should worth RM0.20.
Last point is it is very rare to see Company which suspend a counter for 1 hour! How can investor use 1 hour to determine the effect of the Company?
This blog is related to observations regarding stocks traded in Malaysia. Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.
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