http://www.businessinsider.com/17-equations-that-changed-the-world-2014-3/?IR=T&r=MY

The method of calculating option fair value is one of the 17 formulas that changed the course of history.

It is not a talk kok method or nonsense.

magus, I do not consider that one off dividend in GENTING-WA fair value calculation.

Input required:
1) Expected mother share average future return per year, assume 6.00%.
2) Assume mother share future volatility will be the same as the last 90 trading days historical volatility, i.e. 18.52%.
3) Assume no change to dividend payment.
4) Expiry, use 18/09/2018 instead of 18/12/2018.

Use any option calculator available online, the fair value of GENTING-WA is RM2.13.

HOLLAN5222, The power purchase agreement (PPA) feature fuel cost pass-through, meaning TNB is the one bear the risk of rising fuel cost.

Anyway, when TNB suffer high cost of fuel, they will ask the government to increase the electricity tariffs, at the end all Malaysian pay more for electricity.

GENTING's volatility is higher compared with other blue chips because some big funds can not buy GENTING due to their own rules. You can see these big funds everyday buy and sell those blue chips.

If GENTING SG is Good, then GENTING is better and GENTING-WA is the best.

look things from another angle.

The current prices:
CBIP=2.11,
CBIP-WA=0.40, assume this 0.40 is not due to people goreng, or else meaningless, no need to read further my following writing.

Find the volatility of CBIP from the past 90 trading days, it was 16%, then assume CBIP's volatility will remain the same in future.

Get or use any option calculator available online (For me, I have made my own calculator using spreadsheet), key in all the input required:

1) Exercise price: 2.40
2) Volatility: 16%
3) Maturity: 06.11.2019
4) Interest: Trial and Error until the calculator show CBIP-WA's fair value is 0.40.

I get the Interest=17%.

In the calculation of fair value, the "Interest" is actually the predicted future return (price + dividend) for the underlying. In this case, meaning the market expect or predict CBIP would probably give 17% return per year to its shareholders.

What can we do with this out put of the calculation:

1) If we think the market prediction may not be right, the return for CBIP is not likely to give that high of 17%, but probably will still give reasonable good return, then buy CBIP.

2) If we think CBIP most probably could give more than 17% return per year, then buy CBIP-WA.

3) If we think CBIP will not give satisfactory return in future, then forget about both CBIP and CBIP-WA.

@Alex,

Their annual reports and also the company website.

http://www.cbip.com.my/main/index.php/investor-relations/investor-presentation

The major contribution to future earning of CBIP will be from the plantation in Indonesia, they have 32000 ha land in Indonesia, 9717 ha was already planted as at 31st March 2017. Last year they planted 2039 ha, and the 1st quarter this year they have planted 318 ha, again I believe they will achieve their target of 2000 ha per year.

Is planting 2000 ha per year very aggressive? I think so.

Make comparison with another plantation company that still have a lot of land in Indonesia, GENP has planted only 1649 ha last year.

If we take into consideration the size of the company.
For GENP, 1649 ha / 8850 million market cap, that is 0.19 ha/million market cap.
For CBIP, 2039 ha / 1100 million market cap, that is 1.85 ha/million market cap.

May be there is also other company that is very aggressive in planting which I do not know, please highlight.

So, CBIP will be busy planting 2000 ha per year for the next 10 years, no problem on future earning growth.

Please read the report page 27 about the manager fee, ".... dikira dan diakru secara harian....". So your estimation on NAV could be very far away from the actual number because the market (and NAV) went up and down during the year.

If GENTING = 9.79 is fair, then WA's fair value is 2.58.

Then, by trial and error, if WA = 1.67 is fair, then GENTING's fair value is 8.64.

So? Between GENTING and WA, which market price is fair?

Please learn to calculate the fair value of GENTING-WA.

1) Interest Rate: This is the expected mother share future gain (annualised), assume it is 6%.

2) Volatility: This is the future volatility, but then how do we know what is the future volatility? So just assume equal to the previous 90 days volatility, it is 19.49%.

3) Dividwnd Yield: 0.87%.


Then use any option calculator, you will find the fair value of GENTING-WA is RM2.53.

I guess selling of the mother shares converted from LA, today volume so far is 3.4m only, less than the converted 4.6m shares. They sell mother and buy back LA? So the gap is narrowing?

BornToSpeculate,

IOIPG looks attractive:

1) Low PE.
2) Reasonable DY.
3) High NAB over Price.
4) Big Cap, meaning safer.
5) Owner is super rich, not likely to swindle company money.
6) Singapore side, recent good measure by Singapore Government on property.
7) Malaysian side, IOIPG is a township developer, meaning land cost is cheap, high profit margin.
8) Recent bull run on many property counters, but so far IOIPG did not go up so much.


Bad thing:

1) May be there will be selling pressure when the new right issue shares listed.

Sorry, should not discuss too much on IOIPG here, wrong place.

If LA go back to around 1.20 and far behind mother share, I will go in again.

Anyway, still my advice is, at current pricing, LA is still the best choice among the three of them, just that I am not interested in any of them now.

Good luck.

Take some time to digest the 4.66m shares converted from LA.

Haha...Shouldn't have sold it.

Thanks, I hope so.

Sold all LA at RM1.24.

Tomorrow first batch of 4.66m mother shares converted from LA will be listed.

Dun know if they will sell mother buy LA again, then go for another round of conversion.

pineapple123, OK, same to you, good luck and hope we both make some money.

Of course, say before any announcement of good news, the mother share go up sky high again, possible again the LA lag behind mother share by 10-15 sen.

pineapple123, Hahaha...Name only gambler, but I am quite careful. There is less risk for LA, at worst case, you will get back 1.06 in average including the coupon interest.

What I know, in case of corporate action like takeover and privatization, the offer for mother share and LA will be the same price. If really LA is to be offered less than mother share, you still have time to convert to mother share.

My advice is to sell off your mother share and WB, then go for LA.

You may be thinking that WB can give you more profit in term percentage, but then the risk is very high too.

Base on binomial valuation, if mother share at RM1.28 is fair, then LA fair value is RM1.35 and WB fair value is RM0.39.

Anyway, trade at your own risk.

Bought back LA at RM1.19.

bowman, can you put the link here? So that we can read it.

BornToSpeculate, CBIP has not gained so much in price, can go and study this company, they plan to and in actual did plant 2000 ha per year oil palm in Indonesia, the rate of planting is quite high compare to CBIP market cap is only RM1.1Billion.

pikacat, no point to convert WA to mother share, because the conversion price is RM1.00, you might as well sell your WA and buy mother share.

I guess the news (good things) will be announced and confirmed very soon. Malaysia's typical reaction, high volume and go up on speculation, down when it is confirmed, no matter how good the news is.

I myself dun know how to time the market, so if the brokers revise up their target in coming weeks which will maintain the gap between the blue and red lines, then it is OK, otherwise I assume that KLCI is going to U-turn.

coldinvestor, I started monitoring from end of October 2014, I dun have those brokers's target before that.

Thumbs up

Look at my chart, you can see that our brokers started to revise up their targets slowly but consistently since early October 2016 until today, but KLCI was still going down from early October until the lowest point around X'mas time, but then the KLCI rebound very fast after X'mas, very much faster than the brokers's revision of targets.

I will monitor, if the broker firms revise up their price targets next few weeks, then it is still not so bad. If not much revision done soon, then better be careful.

The KLCI's 12 months rolling dividend is about 54 points, the dividend yield is 54 / 1745=3.1%, not 4% or 5%.

I worry when the news come out, that is the time mother and sons will all go down, cant wait for many days.

Sold all my LA at 1.29

Solo, go and ask for the form and details from

Registrar's Name and Contact:
SHAREWORKS SDN BHD
No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas 50480 KualaLumpur
Tel:03 62011120
Fax:03 62013121

WB from 0.535 to 0.70, that is 31% upside.

Then why not go for LA?

LA from 1.23 to 1.70, that is 38% upside.

Some more, if anything wrong or bad, the worst case for LA is to go back to 1.00.

I am just wondering, why MALTON went up a few sen everyday instead of one time of limit up? The syndicate want to escape from BURSA questioning/investigation?

Let me explain in this way, say we buy LA at RM1.20.

We imagine that there are 2 parts:

Part 1 is RM1.00 bond, which give us 6 sen coupon rate, so the return of this part is 6% per year, quite good isn't it?

Part 2 is RM0.20, kind of a warrant, this part again split into part 2a (25/55=45%) and 2b (30/55=55%), part 2a expire soon end of June 2017 and part 2b expire end of June 2018.

Using my binomial method, the fair value is RM0.38 for part 2a and RM0.45 for part 2b, sum up the fair value is (25*0.38+30*0.45)/55=RM0.42.

JamesPond, you are right. That was why I went in again, and let say privatize or take over, once they fix the price, the LA holder will have plenty of time to convert to mother share, so basically by that time both mother and LA will have same value.

I bought back LA at RM1.20, because the difference between MALTON and LA is more than 10 sen, take some risk.

MirageHotelPD, Yes, I placed 1.14*404 twice, I wish you make money from 1.14 onward.

Onglai88, I actually have no confidence in MALTON, I bought LA at RM1.03 because the worst case is I collect 6% coupon rate and wait for cash redemption, that give a return of 3.34% p.a. to me. But now I sold it at RM1.14, already earn much better. I think if MALTON could went up from RM0.665 to RM1.20 within 2 months plus, it could also go down below RM1.00, nobody know?

I bought LA last week, and sold all this afternoon at RM1.14. Bye..

JamesPond, Me too think that RM1.75 is too high, that is why I bought LA instead of WB. Target is for reference only.

JamesPond，The RM1.75 target was given by RHB, not something pluck from sky.

Bruce88, you can right click the image and select "Save image as.".

Now when MALTON and MALTON-LA are at RM1.15 and RM1.06 respectively, it is better to buy MALTON-LA. Using binomial method, if MALTON at RM1.15 is fair, then MALTON-LA's fair value is RM1.24, which is 17% higher than market price of RM1.06.