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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » semb w 0015 - unseen analysis

semb w 0015 - unseen analysis

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1semb w 0015 - unseen analysis Empty semb w 0015 - unseen analysis Wed Sep 07, 2011 6:41 pm

cse.profit

cse.profit
Senior Equity Analytic
Senior Equity Analytic
It is true that i own semb.w0015 shares and without bluffing i shall enter to the logical reasoning behind my investment picks. would love to have a professional and logical fact based dialogue without mere speculation based on the pricing.

I hope all the semb shareholders are updated with the warrant conversion rates and the time line. It is 1 rupee for the voting warrant and .8 rupees for the non voting warrant. based on simple mathematics we will do a simple valuation.

closing price 7/9/11 warrant conversion final-price(before the ex-TERP)
semb.n0000 - 2.6 = 2.6
semb.w0015 - 1.2 + 1 = 2.2
semb.x0000 - .9 = .9
semb.w0016 - .5 + .8 = 1.3

some people try to calculate the return by dividing 2.6/2.2. Its not practical.warrant will follow the voting and hence we need to identify the value in the warrant. here from the return wise the most attractive seems to be semb.x. but in technical point of view since we have lot of shares in the market and 10 cents trading mentality of semb.x holders we cant expect huge returns from this share though the price is attractive. always a seller will come .even when the voting price when to 3.6 it the non voting price didn't cross 1.1. so the too much of liquid nature has eaten the share. so the only attractive share remaining is SEMB.W0015....please do mark my wordings. semb.x is attractive in terms of valuation. but not in terms of technical movement. but semb.w0015 is both attractive from both valuation and technical movement aspect as well. yesterday it went to 1.8 rupees within seconds when the money was pumped in to the voting share. I am not aware of whether a deal is going on or not. if something fishy goes on and just imagine in case the voting goes back to 4(it already went to 3.6 yesterday) the voting warrant will be 3 rupees worth. in that example when it is a 54%(4/2.6) gain for voting , if the warrant 15 holders wait until December 12th its 250%(3/1.2) massive gain for them. this is just an example as well. the objective of the example was to carry out a simple mathematical valuation to show the exponential returns given by semb.w0015 for a natural increase in voting price. same happens the vice verca. if semb voting prices come back to 1.5/2 rupees the loss is very high which is a highly unlikely to happen due to people like the famous Dr.Ts. I did a small analysis on dr's shareholding. I hope you all know that when an single investor / or an entity acquires 30% of the said company it is required to go for a mandatory offer at the highest price which they bought the shares. I also found something interesting when i was analyzing this matter and his shareholding percentage. he has 241,572,424 voting shares out of the Issued share Capital of 826,486,514 which is 29.23%. Oh my god. to my astonishment its like dr.senthil owns semb. according to my calculation if he obtains another 6,373,530 shares he will required to give the mandatory offer. still 6.3 million share sis a big deal for most of us.
but do you think its true. my friends i remember the lesson of learning the EPS and the diluted EPS.we should calculate the future shareholdings to tell exactly what is the maximum amount of shares dr.senthil can buy more without facing to the trouble of giving an mandatory offer.so lets calculate . i mentioned about the voting shareholding. lets look at the voting warrants composition . we do not even look about the non voting share and its warrant due to the fact that it doesn't have any controlling power.

dr.senthil had only 2,457,224 voting warrants by end of June 2011.but according to the latest announcement http://www.cse.lk/cmt/uploadAnnounceFiles/2331314355660_445.pdf
he has bought another 1,808,500 shares (73.5% of what he already had- 1808/2457*100) and has a total shareholding worth of 4,265,724 voting warrants out of the total Issued share Capital of 381,455,314. hmmm so lets calculate the voting warrants percentage which dr.senthil holds. its a meager 1.19%(4265/381455*100). so based on the assumption that dr will not sell any voting shares and will convert the warrants he holds shall we calculate his shareholding by December 13th.

total voting shares,warrants holding= 241,572,424+4,265,724=245,838,148 shares
total issued voting shares/warrants = 826,486,514+381,455,314=1,207,941,828shares

so the percentage = 20.35%(245/1207*100)
so my dear friends he is having only 20.35% of the company shares at present. not 29.23%..so keep that in mind and if he wants more.the only way is to buy from the warrant 15 from the market . so earlier we calculated that only 6.3 million voting shares can be calculated by him for the 30% rule. lets calculate the number of voting warrants he can collect max if he had money and interest on the company.after all having 29.23% and buying majority of the warrant 15 at 1.1 he will be happy to enter at 1.2/1.3 or even up to 1.7(voting price 2.7/2.6) .

total number of voting after conversion= 1,207,941,828shares
30% of it = 362,382,548 shares
currently he owns 245,838,148 shares and the maximum he can get would be 116544400 shares(by deducting). which is 116.5 million voting warrants. Oh my god. why didn't i realize this. How come i became this ignorant.its 116.5 million warrants not 6.3 million ...so this is to the people who say that dr.senthil cant buy more of semb shares due to the mandatory offer..Hope all the doubts are over.I don't know whether dr will enter or exit.....but if he has the money people remember he can enter without facing any regulations(We all know that he has money). Now from his point of view if i were him i would sell few of my voting shareholding such that with the money i buy warrant 15 until achieving a 29.99% shareholding leaving the additional money for warrant conversion.if he sells voting .it'll be a massive profit for him. and if he buys warrant 15 still it''ll be a massive profit for him.....and my friend 30% shareholding..don't even think about it.whoever wanting the controlling stake now its a battle between who gets the biggest amount of voting warrants. so all i wanted to tell is the IMPORTANCE OF SEMB.WARRANT 15 for the controlling parties. we don't know the future. tomorrow the warrant might even fall to 1 rupee. but the value remains the same.and plus remember the voting warrant has a Public Holding of 99.36%.so will stop here giving you all a time to ponder about..have done some more analysis as well. will contribute based on interest. as you may have notice i don't generally post a lot. quality matters over the quantity. tc. Happy trading

2semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 7:02 pm

RANGANA PERERA


Manager - Equity Analytics
Manager - Equity Analytics
Wow very good analysis. bom I'm totally agry with you

3semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 7:12 pm

Market Sucker

Market Sucker
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@cse ........ you sounds a senior member we had Suspect Very Happy

btw good one mate,as i rmmbr quibi put a post of intrinsic value of warrants in CSE, couldn't find it to provide the link Rolling Eyes

4semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 7:46 pm

market_rana

market_rana
Equity Analytic
Equity Analytic
@cse.... Thanks for your analysis. According to warrant conversion valuations my personal view is there is a possibility to decrease the SEMB.N up to 2.20 while SEMB.W..15 remains unchanged (1.20/1.10) ? What's your idea on that?

5semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 7:51 pm

cweerakoon


Equity Analytic
Equity Analytic
Great analysis. During last year market drop. I was able to recover my losses with semb. Even though fundamentals are still down, if some one stick to semb this year won't have losses during recent market drop. It seems to be a stable stock.

6semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 8:34 pm

wcwchamara

wcwchamara
Senior Equity Analytic
Senior Equity Analytic
This is a really good analysis. Keep it up. Very Happy

7semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 8:48 pm

cse.profit

cse.profit
Senior Equity Analytic
Senior Equity Analytic
@rangana- thank you.

@market sucker- hehehe you are trying to recognize me by my reasoning and writing style. good attempt. by the way this is my first posted topic from this profile name in this forum.I have already commented on other posts. earlier i was appeared in another so called famous forum in a different name which crashed and will not reveal my identity due to ethical issues. any way if you check my history for each and every post of mine i have backed with reasons. so never ever think to put me in to those manipulator baskets. i may be right , i may be wrong , but i always back my stock with logic. I think that's what everyone wants. yes regarding the quibits post it gives a good insight about to the warrant conversion.

@market.rana - yes that will happen if no party is interested in the controlling stake. yes so that is the worst case scenario and still semb.w 00015 will trade at 1.2/1.2 by December 12th. so their are few tips and stories which comes to my mind when analyzing this share. now i will tell one possible game plan which i would do if i were dr.senthil or the 24 year old aggressive mr.r guatham(no ones no about him- just check the top shareholder list). first i sell all my voting warrants creating the market to panic and bringing down the warrant to .9/1 rupees. then i sell most of my voting shares up to 2 rupees and get out a huge pile of cash. so by the time a huge amount of voting shares have been sold the warrant should trade at around .5/.6 levels..i got a huge profit by selling my voting. i didnt get a huge profit my selling my warrants. so whats next..like a mad man buy aggressively the warrant to match with the voting price....so by this way i will even get more profit and by December 13th my shareholding will be 29.99%. not 20%.. hmmmm.a very nice and interesting fairy tale....isn't it...yet isn't it strategical.....after all this is how we should think of. nice game isnt it. enough of fairy tales..hehhee...so if their is a interested party we still don't know what will happen. for example i know one of the top major shareholders which i don't want to mention has even got an offer to exit at 3.5 recently. But he didn't accept the offer. if you closely identify the list you might even recognize the person. but will not disclose due to ethics.
anyway in case of a need of the controlling interest we can look from 2 parties. one complete outsider wants to get the control over the dr.senthil and the clan. or dr.senthil itself want to get the full control. in both case both will try to collect the warrant.15 if they want the controlling stake(included the facts above). if no one is interested this will be stable at 1.1/1.2 stages and still calculate is their any loss.hehehe...so think and trade. patience is the name of the game. lets wait and watch the developments.

@cweerakoon-very true.had very good profits.I am A FIRM BELIEVER ON FUNDAMENTALS...but SEMB.w0015 has been a blessing for me for the most of my trading career. we should not tell whether it is going up . its not good to say so. because lot of new kids are watching these. so let us present the facts. let them take actions which they will be responsible. let us make this forum a wonderful reasoning based forum.

@wcwchamara- thank you my freind....would love to have a rep. hehhee..afterall for the hard work..hehhee

8semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 8:56 pm

chamith

chamith
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Market Sucker wrote: i rmmbr quibi put a post of intrinsic value of warrants in CSE, couldn't find it to provide the link Rolling Eyes

Is this what you are looking for ?


semb w 0015 - unseen analysis W10

9semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 9:22 pm

cse.profit

cse.profit
Senior Equity Analytic
Senior Equity Analytic
yes thank you chamith for the link according to the updated data

sembw0015- 1 / 2.6-2.7 / 1.2 - and undervalued by .3/.4 rupees and 15%
sembw0016-.8 / .9 / .5 - and overvalued by .4 rupees and 44%...

10semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 9:50 pm

RANGANA PERERA


Manager - Equity Analytics
Manager - Equity Analytics
Why did PPL bought at SEMB. RS 2.60-3.80 Shocked

11semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 9:58 pm

sanjaya351


Manager - Equity Analytics
Manager - Equity Analytics
it will soon run again to 4-6 levels s

12semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 10:30 pm

Chanuque

Chanuque
Manager - Equity Analytics
Manager - Equity Analytics
Whatever the gurus' analysis, those who dumped SEMB.N @ LKR 3.60 are the big winners ( As a short term gaining ) and good luck with warrants .. !

13semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 10:32 pm

Ben Graham

Ben Graham
Senior Equity Analytic
Senior Equity Analytic
nice analysis cse.profit. + rep from me. wonder why people havnt gvn u ny +reps. Smile we need analysis like this. not rocket statements.

14semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 10:34 pm

Market Sucker

Market Sucker
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@cse-hehe,welcome back Wink

@cham-ya bro,thats the stuff,thanks Very Happy

rep to both of you Very Happy

btw can anyone tell me the PE of SEMB?
over 100 times,am i r8? forgive me for my ignorance Smile

15semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 11:08 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Market Sucker wrote:@cse ........ you sounds a senior member we had Suspect Very Happy

king

16semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Wed Sep 07, 2011 11:27 pm

RDS

RDS
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote:
@Market Sucker wrote:@cse ........ you sounds a senior member we had Suspect Very Happy

king

cse.XXX

After a long time i have read this kind of analyze, i think this forum fulfill now, i was looking for this long time, finally found. Keep it up cse.profit or cse. - - -

+rep from me.

i still remember yr life story in another forum. (hope i'm correct)

17semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Thu Sep 08, 2011 1:11 am

roshanalv

roshanalv
Manager - Equity Analytics
Manager - Equity Analytics
Thanks for a Good Analysis , but one fact u forgot to consider , what will happen to voting share price once the warrants convert to ordinary voting shares ? It's obvious that price will come down.

Comments please

18semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Thu Sep 08, 2011 9:49 pm

cse.profit

cse.profit
Senior Equity Analytic
Senior Equity Analytic
really sorry guys for the late reply....hmmm. today was a busy day. so lets get in to the topic.

@ rangana perera- It is the people and the general market dynamics(supply and demand) which determines the final price of the shares. so at that prevailed time a sudden demand occurred and everyone chased it and everyone wanted a share of the rally. but it was clear that it stopped at 3.6 and market reversed. so if you closely monitor the todays trading session in the middle of the day thier was a sudden interest for the voting share around 2.8/2.9 and it also ended up at that price. with this someone cleared the entire 1.5 million shares thinking that the rally has started but to his surprise voting again got stagnated. the price he bought thinking of a rally was a good price to enter with comparison to the voting price. so the story behind this is LOT of people know the value of this warrant 15 thought they are bit doubtful about one thing. They are not sure about the direction and the trend of the voting share because whatever the analysis carried out eventually the warrant 15 would follow the voting share with a theoretically 1 rupee difference. so the interested retailers are keeping piles of cash and the moment they see the bus picking up they start cashing in. its a good strategy. but i prefer it good for the seasoned , trained experts who can time very well. will give an advice to the new comers because in the coming days we will be able to see lot of posts saying 'i bought this at this price'/'this share will go to this levels without any reasoning'/'shouting at sec/cse officials regarding investment decisions you and i make'... so the general perception is to cash is when the bus is picking up. Its good if you are a great timer. personally i am not that good in timing. the more years you spend in the stock market and the more mature investor you become , then only you feel how immature you are when identifying the market mechanism. so for years the best strategy for me has been first of all identifying the correct bus. and the get in to it bit early to take the comparative advantage. and wait till it picks up. if you have chosen the right bus you can sleep comfortably and when it rallies you'll be the happiest man on earth. rather than testing your luck by entering at the peak and bleeding and loosing your entire capital. so this is relevant to any thing in life. rangana since the lot of warrants have been bought at 2.6/3.6 range the probability that they will sell off under those prices are very less which is a very good news for all the warrant holders.

@sanjaya 351- sanjaya if that happens i will be one of the happiest man. but i would like to convey some message to you. please don't posts this kind of information which doesn't have any backings. everything is psychological and patience is the name of the game. so any one who knows the real value will wait and reap it. but the new kids who are reading these posts can get mislead by this type of future prices and sometimes even burn their hands. so we need to be ethical. i respect your ideas brother , but would love to hear some rational backing in the future. then the people will get automatically interested in the share.

@chanuque - First of all i want to mention that i am not a GURU . I consider my self as a small kid who tries to understand this crooked market for years and still not completed my learnings. I may GO WRONG AT ANY TIME. You are absolutely right brother in any market existence of the investors and the traders are a must. even if you own the best share in the world you should exit at the top and re enter at the bottom. thanks for you kind wishes.

@Ben graham- really happy about your profile name. it tells that you are keen on the fundamentals and really happy that you have given me a rep. mhh ...actually i am bit new to this forum . so that's why i have very low amount of reps. i would love to have some more so called reps. but i am not a follower of this points/reps/or the number of posts. quality is preferred over the quantity. anyway thanks again for that rep.

@ market sucker - thanks for the rep brother.
yes it is trading at a very very high PE level. that is very true which i will disclose happily because i prefer my reputation rather than finding some easy money. according to the quarterly financial statement 2011 the basic EPS was a negative .01. so you will get an idea from that. but the company is at the bottom of its operational performance. it has not initiated any new strategy and dr.senthil and the BOD will not keep this company idling in the future. so in future we can hope for a turnaround on the grounds that at the moment their nothing to loose. will tell you something psychological which i learn t over the years. it doesn't matter whether the PE is high or low when dealing with shares which have stabilized. for an example semb. has been increasing in a slow rate over the time and it has eventually come to a 2.8 position. but the newcomers should keep in mind that when you analyze this hare it is not something like HVA,BLUE which was at very low prices some time ago. so the support created by the market is often very high. and the biggest shareholders have been cashing in these current prices. so don't panic about the value. short term it is a crappy stock. but their should be some reason for this share to be taken over by dr and the clan.

@chinwi - respect you brother. will give you one clue. you are elder to me..hehehe...I read all your posts with great enthusiasm because i v learnt so much from reading them. Do kit.

@RDS- wow . really impressed. any way don't want to give any one any hint or thing. want to start from the scratch on this forum. any way really thanks for the rep brother.kit

@roshanalv- yes good observation roshan. when we do learn the concept of Theoretical ex rights price(TERP) we observe this.the answer is in it..It is theoretical. any way it should be in between the two price points divided in the ratio of the shareholder ratio. so if we take the today's closing prices the voting price is 2.8 rupees and the voting warrant is 1.3 rupees. think that today is December 12th and we all converted our shares. shall we calculate the final value. hmm any tom can say that it should be between 2.3(1.3+1) and 2.8. yes . but shall we find the spot theoretical value.

voting share Issued share Capital 826,486,514
voting warrants Issued share Capital 381,455,314
so now we can easily calculate the equivalent TERP
=2.3+(2.8-2.3)*( 826,486,514)/( 826,486,514+381,455,314)
=2.3+ .5*.6842105
=2.64 rupees. so we will assume it to be 2.6. so just calculate still who's the winner. warrant 15 holders return on investment according to the so called TERP price is 14.78%(2.64/2.3*100-100). For me that is more than.

roshan so that's the theory. but that is not the case . its the concept of bottleneck. even at our office the least productive task determines the entire productivity and efficiency. if you are an chemistry lover you would know that the reaction rates depends mainly on the reaction which exhibits the least rates. so the same applies to the shares. it depends on who got the shares for the lowest price and their holding power. for an example if the people who bought at the lowest price(in this case the warrant 15) might even sell at 2.4 if they become panic. and they might not even sell at 2.7 if they are sure that the voting people are not going to sell with a loss. no one likes to sell in a loss. so a classic example would be the semb share itself. i know you were a guy who was with this share for a long time and you might understand very well what i am trying to say. do you remember when we go the semb.r0001 and r0002. finally the rights were traded even at 10 cents and no buyers were their to get this crappy rights at the lowest possible price in the market- 10 cents-. everyone thought that it would be the end and so on and so forth. i bought the rights 0002 which was the non voting. the way i remember i paid 60 cents for the rights conversion. in return i got 1 non voting share and a free warrant. rest is history and all of us know what happen to the people who got the demand less rights. the entire cost was 70 cents. but the non voting it self stabilized at the 70 cents and the warrant was actually for free....and you all how profitable the warrant was for the original rights subscribers. so some food for thought while i will have my food and return.

All the very best and thanks a lot to ben graham, market sucker and RDS for those reps.tc.kit

19semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Thu Sep 08, 2011 10:02 pm

Roboticfx

Roboticfx
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Good post. Very Happy

20semb w 0015 - unseen analysis Empty Re: semb w 0015 - unseen analysis Thu Sep 08, 2011 10:38 pm

RANGANA PERERA


Manager - Equity Analytics
Manager - Equity Analytics
Thanks for CSE.PROFIT Good post Very Happy

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