Tuesday, March 8, 2011

Kulim-WC running ahead of fundamentals?

KUALA LUMPUR: The price of Kulim (Malaysia) Bhd's warrants, Kulim-WC has surged to RM1.09 in Iate afternoon on Tuesday, March 8, which is an increase of RM1.04 since it started trading last Thursday with a reference price of five sen.

At 2.48pm, Kulim-WC is up 18 sen to RM1.09 with 11.04 million units done.

The mother share is up four sen to RM3.39. There were 1.88 million shares done at prices ranging from RM3.35 to RM3.41.

However, the conversion or strike price for the warrants is RM3.85. Hence, it would cost RM4.94 to convert the warrants into shares based on the current price.

Despite the move by Bursa Malaysia to cap the upper limit of the warrants, the price has continued to rise and it has attracted heavy trading interest. The surge in the warrants would be justified if investors view there is more upside for the share price.

A total of 156.17 million warrants were issued to the entitled shareholders on the basis of one warrant for every eight shares of 25 sen each in Kulim held after the subdivision of every one existing ordinary share of 50 sen each in Kulim into two subdivided shares'' and bonus issue of new subdivided shares on the basis of one bonus share for every one subdivided share held after the share split.

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