dare? go in low.. later 7..

no problem.

Rebounding is a matter of time, but do exercise cautious as the KLCI index is indeed in a very high position. No one knows what is the right price to go in as the market reacts base on news that related to the stock. As for SP Setia, project contracts are those that will really drives up it shares.

Foreign fund is also another factor that is important in the direction of the market. When more foreign funds is being poured in, stocks will go up (prior to 1997 crisis), and when foreign funds is being pulled back, the stocks will plunge due to supply of shares more than demand where people will do a lot of panic selling, trying to hold on to cold hard cash when the market is uncertain.

If you'd ask me, what is the right price to enter, honestly I do not know. But do ask yourself, you plan to make quick bucks (as a contra player), looking for capital appreciation over a period of time or going in for dividend play (long term)? Rule of thumb, always invest within your mean, and do not rush in buying stocks as the timing is very important.

A bonus issue will increase the supply of shares. More supply, lower prices. Hope that clears the air. 

I thought bonus issue is akin to dividends. Before and after the bonus issue, the total investment and return should stay the same (theoretically).

Say a stock trades at RM1.20 and it pays out RM0.20 as dividend. On Ex-date, the share price should adjust to RM1.00.

Similarly, say a stock trades at RM2.00 and it gives 1 bonus share for 1 existing share held. On Ex-date, the share price should adjust to RM1.00. Since you now get 2 shares, the total value will still be the same prior to the exercise.


Yes, that is why I am wondering, why the price drop of SP Setia today? It puzzled me.




Private placement is different. New money will be injected and the issue price is usually at a discount to the market price. Our shareholdings as well as the earnings will be diluted. In the short-term, it's not good for existing shareholders.

I'm actually quite confused also. The money is for expansion. They have so many projects in the pipeline. All the good factors should outweigh the pressure arising from the private placement, right? Why the heck some research houses already downgraded the stock simply because the earnings will be diluted?



Do you have the link of the research houses downgrading SP? What I am reading is still a TP of RM 7.50 to RM 8.00 for it.

@T816B

The price drop is not so much due to the bonus issue imo. It's the placement of new shares. Even if it's a pure bonus issue exercise, the price won't adjust until ex-date, right?

I pasted the news article by Bloomberg on the downgrades by ECM and RHB. You may refer to my earlier post. ^

I think I was wrong. If bonus issue is similar to cash dividends, the warrant terms won't change. Is it only share split will get the exercise price revised? I remember seeing an announcement pertaining to this recently. I can't recall which stock already. I think we need to find a warrant which had similar corporate exercise to confirm.

Call warrants exercise price will be revised (read here). Not sure about warrants.

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Added on January 18, 2011, 11:01 pm

It was only a week ago when most research houses were bullish on this stock. They changed their stand so quickly.