Public Bank & YTL Covereds
What about the other two new covereds? Well, PBB-CB also had an issue price of just 13 sen and also went ballistic to 40.5 sen on huge volumes. Its 10 into one, meaning you would be buying 10 covereds. Let's say the covered price you got was 35 sen = RM3.50 and you would need to pay another 8.85 to convert into ONE mother share = RM12.35. Premium 12.35/8.95 = 40%. Gearing 8.95/3.50 = 2.5x. Not as bad as Genting-CD, but very very expensive also!!! The fair value should be closer to 24-26 sen and not anywhere near 34-36 sen certainly!!! Very expensive!!!
YTL-CB has an issue price of 11 sen and went to a high of 34.5 sen and now is trading at 26 sen. Again ten into one, say you buy at 25 sen = RM2.50 plus conversion RM7.35 = RM9.85. Premium is 985/6.80 = 42.7%. Gearing is 6.80/2.50 = 2.7x. Gearing is much better but premium is still way too much. Don't be tricked by the low absolute price. Fair value is only at 14-15 sen, and not anywhere near 25 sen!!!