Written by Joseph Chin
Monday, 04 January 2010 18:54
KUALA LUMPUR: AmInvestment Bank Bhd had on Monday, Jan 4 issued four new call warrants which were over TAN CHONG MOTOR HOLDINGS BHD [] (TChong CW), IJM Land Bhd (IJMLand CW), Singapore Exchange Ltd (SGX CW) and Wilmar International Ltd (Wilmar CW).
4 new call warrants from AmInvestment Bank will be listed on 5 January 2010:
New Warrants Expiration Type Ex Price Ratio
IJMLAND-CA 3/1/2011 Call MYR 2.2000 3 : 1
TCHONG-CA 3/1/2011 Call MYR 2.9000 3 : 1
WILMAR-C4 3/1/2011 Call SGD 6.4000 20 : 1
SGX-C1 3/1/2011 Call SGD 7.9500 20 : 1
"These call warrants are targeted for short term traders who want a leveraged bet on the underlying stocks. All four have an issue price of 16 sen and a one-year tenure," it said on Monday.
The exercise ratios for TChong and IJMLand are three CWS to one share, while SGX and Wilmar CWs have exercise ratios of 20 CWs to one share. All four are European-style cash-settled call warrants and will be listed on Bursa Securities on Tuesday.
AmInvestment Bank said the TChong CW was the first on the company, which has had positive news flow recently, from its regional acquisitions in Thailand and Vietnam.
"It stands to profit from AFTA's automotive market liberalisaton as it continues its strategy to expand its assembly and distribution rights in the region. In addition, there is the likely revaluation of its 47 acre land in Segambut, which has not been revalued since the 70's and is booked at a value of about RM40 per square foot.
"Nearby industrial land has more recently been valued and priced at RM236 per square foot; a revaluation at these prices would result in a significant surplus of RM400 million (60sen per share) to TChong," it said.
AmResearch, which won The Edge weekly's Best Call Awards 2009 for the automotive sector, has a "Buy" on TChong, with a 52-week target price of RM4.30. TChong closed at RM3.12 on Dec 31, 2009.
AmResearch also won The Edge's Best Call Awards 2009 for its recommendation on IJM Land and reiterated a "Buy" on the stock with a 52-week target price of RM3.60.
According to the investment bank, IJMLand continues to deliver successful launches for its RM5 billion luxury residential development at The Light in Penang.
Further catalysts for re-rating are its likely monetisation of its Aeon Mall (RM400 million) in Malacca, the potential acquisition of 2,500 acres of land adjacent to Kota Kemuning for further NAV growth, and plans for a resort-cum-residential development for its 1,188 acre Sebana Cove in the greater Desaru area.
IJMLand closed at RM2.35 on 31 December 2009.
"There is a company-issued warrant on IJMLand but it is relatively expensive at about RM1.38 and has low gearing of only 1.7 times. In contrast, AmInvestment Bank's IJM Land warrants will be much cheaper, with an issue price of 16 sen and a gearing of 4.7 times," it added.
As for the SGX-CW, it will be the first locally-listed warrant on the company. SGX owns and operates Singapore's securities and derivatives exchanges and their related clearing houses. SGX closed at S$S8.33 on Dec 31, 2009.
AmInvestment Bank said the Wilmar-CW banks on the China growth story where it has strong manufacturing and distribution networks in its China edible oils and proteins business.
It said Wilmar, Asia's largest agribusiness group, is poised to profit from China's growing consumption of these goods. Wilmar's core business activities include oil palm cultivation, the refining, processing and merchandising of edible oils, oilseeds and grains, and Wilmar is also involved in specialty fats, oleochemicals and biodiesel manufacturing. The share closed at S$6.42 on Dec 31.