Kenanga have 3 portfolio:
1) Thematic
2) Growth
3) Dividend Yield
The 3 portfolio have Redtone-LA. Why buy redtone-LA????
To ride on the group’s future prospect, we have decided to invest in Redtone-LA instead of the mother share, given that the former provides a better capital upside coupled with interest. The group’s LA is a 10-year 2.75% (payable annually in arrears on March each year) ICULS and are convertible into fully paid ordinary shares of RM0.10 each at any time from 4 March 2010 to the maturity date of 4 March 2020, at the rate of 10 ICULS for 4 ordinary shares. The group’s share price closed at RM0.445 while the LA ended at RM0.175. This provided a small arbitrage opportunity given that an investor could buy 10,000 RedtoneLA @ 0.175 each and subsequently convert to 4,000 ordinary shares. That said, the average of the 4,000 ordinary shares costs would be only at RM0.4375, a 1.7% discount to the group’s ordinary share closing price yesterday of RM0.445. On top of that, Redtone-LA also provides a 2.75% interest that is due to be received in March 2013, which could provide some buffers to its share price as well.
