Tuesday, July 26, 2011

Hibiscus on steady recovery after mispricing

KUALA LUMPUR: After a weak debut due to the market mispricing Hibiscus Petroleum Bhd on Monday, July 25, the shares and warrants staged a recovery on Tuesday.

At 3.05pm, the shares were up seven sen to 60 sen and the warrants added 3.5 sen to 17 sen in very active trade.

With the shares at 60 sen and warrants at 17 sen, the securities combined were equal to 77 sen, which was above the offer price of 75 sen.

When listed on Monday, the share price was adjusted to 62.5 sen and the warrants at 12.5 sen.

Hibiscus Petroleum, a special purpose acquisition company, saw its public issue of 10 million new shares at 75 sen each made available to the public oversubscribed 3.8 times.

RHB Research Institute said the market could have mispriced the shares of Hibiscus Petroleum, Malaysia's first special purpose acquisition company (SPAC) when it was listed.

'In our view, given the share has the 90% refund guarantee, it should trade at a minimum of 67.5 sen. If we include the after-tax interest over a three-year period, the share should trade at 73 sen. We thus estimate a minimum arbitrage gain of 14 sen a share or an upside of 26.2%,' it said on Tuesday.

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