Structured Warrants Recommendation

When  selecting warrants, the first thing you do is to select the mother shares itself so similarly when you are analyzing charts for TA, you look at the mother share, you need not plot a separate chart for the warrants (this is especially true for structured warrants).  It is only after identifying the mother, you will zoom in to select the son.  Choose an issuer you are comfortable with, or rather, as for myself, I will choose a warrant that has most potential, taking into consideration of exercise price & conversion rate and of course expiry date.  However, if you are very certain the mother share is going to explode in imminent time (next couple of days), even an expiry term of less than 30 days is more than safe.

Now let’s look at some warrants pick

1.        Unisem CJ  (mother share RM2.48, ex pr. RM2.05, ex. ratio 4)

Entry price RM0.155, TP1  RM0.18, TP2 RM0.21

A semicon company, Unisem enjoys high profit margin on its wafer level chips which is found in all your smartphones.  Their products are exported globally with their main customers in the US and Asia Pacific, Europe and Japan.  Compounded with the Forex again, Unisem has been rising on the quiet from RM1.58 since 17/8/15 till RM2.48 as of 11/12/15 (almost 60%), similarly the warrant was just traded at RM0.05 back and has now risen more than 200%.

The son has risen 200%, can still enter? You ask.  Isn’t it too high, isn’t it risky?

Playing all kinds of shares has its element of risk, however, for this particular share its risk is limited to the general performance of Bursa or the Global stock exchange outlook.  It does not pose any risk greater than any of the 1000 shares listed in Bursa but FA and Ta indications points it to a bullish bias.

Unisem mother share, TP1:  2.60, TP2: 2.74.

At current price of RM2.48, at TP1 Unisem will only give u  5% gain.  However at RM2.60, it is anticipated Unisem CJ will be priced at 18 sen, a 12.5% gain even if you bought at 16 sen and at TP2, your warrants would be at 21sen or 30% gain

2.       VS CA  (mother @RM1.51, ex pr. RM1.31, ex ratio 3)

           Entry Price: 13 sen  TP1 RM0.15  TP2 RM0.17.5

           VS industry, ah..h, A favorite of KYY, a stock that is constantly recommended by him so there is no further need to                    expound  on its strengths – same reason export counter, Forex gain, bla bla bla. 

           A Dragonfly Doji was formed on 11/12/15 indicating that VS may be on track to resume its upward trend. It may soon              retest  its recent high of RM1.62 and upon breaking out, a high of RM1.84.

3.       Armada C3 (mother 99sen, ex price 98sen, ex ratio 1.5)

           Entry Price 6 sen   TP1 (imminent) 7.5sen  TP2 9.5 sen  

O & G related stocks has taken quite a hit recently (except for PetronM –refinery ) due to the obvious.  However, one fails to understand that Armada’s FPSO (floating production, storage and offloading) income has been stable and increasing in profits.  Contracts are made in US Dollars  and as such the appreciation of USD to MYR will have a positive impact to Armada and not the other way around.  The two other sectors, Offshore support vessel (OSV) and Transport and Installation, though not contributing to the bottomline profit, Armada’s stock price has nevertheless factored that in 2014 last year when its price used to be above RM2.00. Its share price now should be stable and hovering above RM1.10 but due to general perception that everything related to O & G is bad, Armada share price took a beating.   Take a look at the shareholders of Armada- they comprise of our local investment funds(EPF, PNB, LTAT) and also global equity funds. With strong management , good fundamentals and the conversion of 3 FPSO which is due to complete next year, Armada is a stock to watch, especially when its price take a dip like as is now.

Why C3? Because C4 is too politically controversial!

On a serious note, because it is cheap and it is very sensitive to the movement of the mother share.  If you look at the historical price of C3 for the past 2 months, it’ s price has been a low of 6 sen and high of 15 sen with high volatility in between. This is due to the mother share price range of 99sen to RM1.14.