Notion is deeply need your money. So fast warrant A now warrant B.
Notion -WA details:
Revised Exercise/ Strike/ Conversion Price : MYR 1.4400
Expiry: 2015
Notion-WB details
Revised Exercise/ Strike/ Conversion Price : MYR 1.000
Expiry : 2017
Notion WB is worth to buy compare to WA.
Premium quite low:
Mother price: 1.21
WB price 0.40
1.40 - 1.21/1.21 = 15.7 % for 5 years warrant is deemed to be in money.
OSK research report: 25 April 2012
Going ex Tomorrow
THE BUZZ
After obtaining shareholders’ approval during its EGM on 16 April, Notion’s (i) 3-for-4
bonus issue, and (ii) 1-for-4 free warrant (Warrant-B) will go ex tomorrow.
OUR TAKE
Revision to share price and our FV. Notion is poised to issue 115.9m new shares to
its shareholders, bringing the total number of shares to 270.5m. As a result, the
company’s share price will be adjusted to RM1.23 from the current RM2.15 whereas, our
fair value (FV) will be revised to RM1.38 (Table 1) from the current RM2.41.
Furthermore, we do not foresee any of its existing Warrant-A being converted into
mother shares in the short term as the warrant is deeply out-of-the-money and hence,
eliminating the possibility of an added dilution impact to its EPS (Table 2). However, the
exercise price for the newly issued Warrant-B will be at RM1.00, which indicates an inthe-money situation. Assuming that investors decide to convert all of their Warrants-B
into mother shares, our FV would be revised downwards from RM1.38 to RM1.24 –
having factored in the utilization of RM38.6m in cash proceeds in offsetting Notion’s
existing debt obligations (Table 3).
Maintain TRADING BUY recommendation with ex-bonus fair value at RM1.38. We
expect its 2QFY12 financial results to be in line with our estimates as we had earlier
factored in stronger sales growth and higher average selling prices (ASPs) from its HDD
segment. Furthermore, we had gathered from the Camera & Imaging Products
Association (CIPA) that the production recovery for digital single-lens reflex (SLR)
cameras and interchangeable (IC) lenses had accelerated and there was pent-up
demand for these goods as well. We continue to like Notion for its diversified product
base that provides a cushion against product concentration risks. We are reaffirming our
TRADING BUY recommendation on the stock, with an ex-bonus FV of RM1.38, based
on 8x CY12 PER.
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