HEVEA (5095) - HEVEA : a broken gem 破碎的宝石
Of course, outside investors like you and me are not priviledged to the inside informations of Hevea. But the tell talle signs were all over the movement of both Hevea and its WB of late.
Learned investors surely know and understand the co-relationship between a mother share and its derivative "son" or the warrant. In all market dynamics, the warrant will always trade at a premium or "out-of-the-money" to its mother shares because of its inherent elasticity. It is this elasticity or leveraging power that attracted investors' enthusiasm, and they are willing to pay a premium for it while at the same time forgoing all dividends that only the mother shares are entitled for.
However, this conventional nature of warrant-premium-over-mother-shares are now broken by Hevea-WB in the last two weeks. As a matter of fact, it still happened today where Hevea shares price closed at $1.16 and WB at $0.895 respectively (conversion ratio 1:1 at a cash tender of RM 0.25 for every new Hevea shares).
Why and what happened?
The answer lies on the non-disclosure to the public on the movement of the shareholdings of the directors and substantial shareholders of Heveaboard Berhad. You may say if that is the case, these interested parties (Directors and Substantial Shareholders of Heveaboard Berhad) may have violated the Bursa Malaysia listing requirements by so doing.
Yes and No, as under the prevailing Bursa Malaysia listing requirements, no disclosure is necessary if it only involves changes in the derivative shareholdings of a listed entity (Hevea-WB in this case). In a plain word, these interested parties need not give a damn to you and me as well as the market regulators to what they do to their Hevea-WB.
This bring us back to why the selling gyration on Hevea and Hevea-WB of late. If you look at the Annual Report 2015 of Heveaboard Berhad, the top two single largest warrant holders of Hevea were both Heveawood Industries Sdn. Bhd. with 32,047,710 and 19,217,240 units repectively or a combined warrant holdings of 42.74% of Hevea-WB.
I have written in the beginning of the year many articles on Heveaboard Berhad and Heveawood Industries Sdn. Bhd. and the shareholders feud in the latter. I can confirm now that all the 42.74% of Hevea-WB have been "disbanded" by Heveawood Industries Sdn. Bhd. and are now gushing out at the gate of Bursa market, ready to be sold off to the public.
This 42.74% or 51,264,950 Hevea-WB selling in the open market for at least the last two weeks explained why the trading volume of Hevea-WB was always bigger than Hevea in this period. When the selling get intensified, the co-relationship between the mother shares and its son come into play, and inadvertantly dragged down Hevea shares price.
Until all these 51,264,950 Hevea-WB finds permanent homes, both Hevea and WB shares price will be under tremendous selling pressure in the medium term. And this has just been aggravated by the not so pleasing Q2 Result of Heveaboard Berhad.
The perceived gem has just been shattered.
PS : I will write again on the 'dark box' of Hevea soon.
HEVEA (5095) - HEVEA : a broken gem 破碎的宝石
http://klse.i3investor.com/blogs/heveatimetoalight/102897.jsp
