For YTLpower, in term of EPS and PER calculated, bare in mind the huge dilution of its large amount of WA and WB. Don't use before dilution figure to justify.

I don't track YTLpower closely, but if before issuance of WB, EPS is 0.22 then you need to take into the account of WA as well which numbers roughly 800 millions of WA, so about 16% more dilution (YTL has outstanding share or roughly 1.5 billins if not mistake, so diluted EPS would be around 19 cents.


1. Prior before they annonced the new WB to be issued at 0.10, YTLPower was hovering aroound 2.20-2.40 level. 2.70 was the price that already after people knew they will issue at 0.10 which already drive up the price.

---

Added on August 4, 2008, 3:26 pmIf the YTLPower share price continue to drop further, then buyback programme might not seen as good while reducing the cashflow of the company.
My personally view, if company not going to use the cash then pay back to the shareholders in term of dividend or capital repayment, if the company need the cash for business operation or expansion then fine, no problem.

I don't like the idea company sitting with huge cash pile, doing nothing. If doing nothing, then better give back to the money to the shareholders. As cash sitting in the company, mostly company will put in money market fund of FD which similar to ours ability that we can do as well.

I had posted before the downside of buyback like financial stocks in US, whereas like Citi annonced buyback at 50-60, now facing credit crisis, need to issue new share to raise capital then it issued to near market price around when is was 30. Those buy back resulted a loss of 40-50% to all the shareholders.
Then those money paid for the buyback is indeedly totally wasted.

This post has been edited by cherroy: Aug 4 2008, 03:26 PM

For those stock giving high dividend, generally the 'sons' will be discount a bit because of potential reduction in share price due to dividend.

---

Added on August 5, 2008, 11:26 amHighly unlikely. Although, YTLPower is a cash rich company, it carries significant of long term debt as well. It is not a totally net cash position to give capital repayment.

This post has been edited by cherroy: Aug 5 2008, 11:26 AM

Warrants has one advatange ie. gearing. If the warrant is discouting more than 3-5%, then it is a very useful tools for those cash strapped and less capital investors/traders as you can free up the cash while still enjoying the upside potential of the stock as same as those holding mothershare one.

But if company give capital repayment of special huge dividend then it would be disaster to the warrant holders.

It is a trade off.

Warrant can be a powerful and tool to use in certain situation especially those good company warrant.

But sadly to say, most good and strong company don't issue warrant as they already are financial sound and cash rich, don't need to issue warrant as a way to raise capital instead they are making capital repayment. Haha.

Not necessary better. It depends.
If those buy back at high price then it doesn't better than giving out dividend.

Eg. If a Company take out Rm2.60 to buy back, but share price plunge to RM1.70, after that distributed to the shareholders as share dividend, then in this scenario it is much better if company initially decide to give back the RM2.60 in cash dividend. Then we can keep the Rm2.60 and buy now at Rm1.80. Which is much much better. Buy back at high price is not good at all and benefit for the shareholders.

Those tax on special dividend can be claimed back by personal depended on your tax bracket under the old imputation system.

It has been buying back since back 2 years ago, not just currently.

A lot of company in KLSE did buyback quite high though generally in last 1-2 years time, because of bull run across in this period of time. Edited, even in US!

Anyway, I still prefer they distributed the cash available to the shareholders which is more realistic and straigh forward. If not use the cash to repay borrowing or expand the business further.
Just my personal preference and opinion.

This post has been edited by cherroy: Aug 6 2008, 05:01 PM

Another point of privatisation is to take advantage of the constant cashflow of the privatised company (if the company is cash rich).

If one company is cash rich, but even as major shareholders, they can't move the cash easily in those public company (for whatever purposes, inter-company etc). But once it is a private company, then yes, one can utilise the cash of it much easily without violating any law.

Online trade mostly min is Rm28. Phone up remisier is Rm40.

Slowly accumulate for some might be mean 30-50 lots per transaction. (x100)
So buy 50 lots or 100 lots, commission rate still the same.

This post has been edited by cherroy: Aug 18 2008, 08:59 PM

If one always transact more than roughly 5K per transaction, it won't have any effect.

I don't know your exact situation, more details will help to clear air.

0.7% is pretty high, the 2 remisiers I usually deal with is imposing 0.6% only, but this rate can be varied depended on investment bank and remisier themselves. But for sure, max is 0.7%.

Then change brokers lor.

Seriously, sometimes you have to ask for it, especially your transaction record is good one (pay on time) should get 0.6%, as nowadays, commission rate is no longer like last time out which is fixed. Now, it is fully negotiable. But for small fish for retailers, generally and majority is 0.6% and 0.42% (online, 30% discount).

It depends on individual and investment bank.

PS: I had no experience with nominee account as personally never like nominee account, all are direct account with investment banks.

Cannot, you need to transfer the shares in your current CDS to the newly open OSK CDS account before you can sell, otherwise at OSK side, you are deem short-sell even though you have the shares at other investment bank CDS account.

Most I encounter with or experience with the investment bank, they are charging at 0.6% throughout even for new customers, so don't need to negotiate either.

Then tell you remiser, how about doing more research after trading hour, so we come out at night to have a drink to discuss.

him? I taught is 'her' ler.

Noted, thanks for the information. That's where forum and discussion can help each other.

I am not a big fan of buying back, better give it as dividend.

You have a point, but my view is always, getting in return as cash is still much better in other form, which I can choose whether re-invest into the same share (buy more using those dividend) or divesify into others.

Just like now share price is 2.00, they give 15 cents annually, so next year share price being adjusted to 1.85. So if EPS is stil the same, that's mean at 1.85, then you can buy at lower PER as well as dividned yield. After 10+ years or so, all initial capital has been recoup back. So the rest is the net profit already. I don't need to worry much in the future.
But for company that didn't give any dividend and decide to keep all the money in the company and use the money to buy back, then if in the future, something goes wrong on the company, all gone together including your initial money.
Just my extreme example, doesn't necessary true.
Don't get me wrong, keeping all the cash and grow with the company also can lead to higher profit in the future. Nothing is certain right or wrong. Just highlight the pro of dividend

Don't forget, those money generated from profit in the company already being taxed 25% also as well, it is not totally tax free as well.

Have to research more details with accountant personnel or google very details before I can comment futher. It can be quite complex, you know lar, whenever involved tax issue, there are a lot of tiny fine details need to identify, which make a lot of people always confuse about it.

If company has a lot of tax credit, they can distribute those dividend with tax exempted status because those money being taxed initially. Most of the time, there won't be double taxation.

Bonus share is a zero sum game, share price will be adjusted accordingly. Bonus share or not doesn't matter actually for shareholders, as if company continues to earn big buck, then share price will keep going up, typically example would be BAT (which not give bonus share or having buy back but give generous dividend while share price continue to surge because of profit incremental which support the share price).
Bonus issue although make you own more, but in term of % wise your right in the company still the same. Major difference come from accounting point of stand.

Just like Berkshire Hathaway, they don't split their share or give bonus issue, which lead to current its share price more than USD 100K per share.

Don't get me wrong, buyback also a good thing which benefitted the shareholders and show company is financially sound. Just different point of view for comparison.

This post has been edited by cherroy: Sep 6 2008, 05:34 PM

Yes, you are right. But EPS is still the same (unless they cancel out the treasury share from the buyback), if distributed to shareholders, EPS still the same because number of outstanding share still the same, just you have more shares on it.

Those are share dividend (distributed those buying back share to the shareholders) not bonus issue. In my previous post regarding bonus share, I am talking on general issue not specific regarding on YTLpower.

Bonus issue of share is not the same as those bonus you are thinking on the YTLpower share dividend.

Just to guide into more proper channel of discussion.

There are 2 type of cash rich company.

Type 1
Current asset is cash rich, but so does it long term liability like YTLpower. It is not a real net cash position (after deduct the liability on bond and loan taken up). Taking over it mean although one get the access of the cash but so does its liability.

Type 2
Net cash rich, no debt, cash sitting in company doing nothing.
Normally in this type of company, company has 2 choice, acquisition for business expansion or giving generous dividend (like Panamy, Guiness, JTinter etc).
So those cash won't be sitting too idle for too long as well. Shareholders will get a chunk of it.

It is plain not wise for the board of company directors to see those cash sitting idle for years, normally they will do either newly acquisition or plan in the future (something wait for opportunity) or giving generous dividend if they had no plan to do anything in near future. If the company director board is doing nothing as mentioned, then this is not a good company management already which they don't look after shareholder benefit at all.

Acquisition made normally have lot of consideration, not purely on cash position alone. Even one company is cash rich, but shareholding is quite 'tight' in the hand of the major shareholders, then it won't be possible to get the deal done.

Another point, is that normally people would only interested in to acquire a healthy company, so it means most of the time, those being acquired company should have considerable amount of cash if the company previously was run in a healthy way.
Cashflow is the main ingredient or like blood in the body for company to stay alive.

Currently equities market is quite bearish overall, so those not a major good news won't have much significant effect. Expect some little respond from the market only, which might be short-live.

What I meant in the previous post is the market won't take that as a major good news (abolish of windfall tax) as a significant factor for stock price upwards movement. My prediction is that it will response a little (up few cents or so), but it can't run away from the market bearish tone currently (don't mean it will go down, just upside potential is capped by the market tone).
This stock usually moves in lesser degree than the market (which usually does for this stock as historical data said it has low beta compared to KLCI)