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Latest Forum Topics / SIA    Last:6.97    -0.08  Post Reply
SIA revived
Wasim_Trade
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21-Jun-2020 10:28     
 
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 Alert Admin 		Singapore & Malyasia in discussion to let Malaysian Citizen to enter Singapore..

NT1825      ( Date: 21-Jun-2020 08:18) Posted:

How about SG side when coming back?

Have SG waived the swap test and 14-day quaratine? 

https://www.gov.sg/article/updates-to-border-measures-for-travellers-entering-singapore

Wasim_Trade      ( Date: 21-Jun-2020 06:55) Posted:

   

Malaysia to let Singapore, Brunei nationals in Covid-19 test and quarantine waived
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Trader130
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21-Jun-2020 10:01     
 
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 Alert Admin 		Waiting for lifted then the floated 41% equates to multiple by current price = $5.20 TP in near term 

NT1825      ( Date: 21-Jun-2020 08:25) Posted:

3 million shares is a small number compared to 3.0 billion total shares.

Reality is that the UOB KH report has been published and received by all the broking houses here and noted by tens of thousands of investors. It is no longer considered privileged information. Major share holders make about 59% of the total old and new shares. Balance 41% are ' floated' in the market.
Just 10 to 15% in volume of these shares pull out is sufficient to weaken the support at current price  and the fall is obvious like the many other counters seen recently. Many will sell now and buy back later.
Buying support will be back when the price dipped to 3.6x. Anyone believes SIA is making good money now?

Ljxxxx      ( Date: 19-Jun-2020 12:50) Posted:

Where do you get the information from? Can give me the link
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NT1825
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21-Jun-2020 08:25     
 
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 Alert Admin 		3 million shares is a small number compared to 3.0 billion total shares.

Reality is that the UOB KH report has been published and received by all the broking houses here and noted by tens of thousands of investors. It is no longer considered privileged information. Major share holders make about 59% of the total old and new shares. Balance 41% are ' floated' in the market.
Just 10 to 15% in volume of these shares pull out is sufficient to weaken the support at current price  and the fall is obvious like the many other counters seen recently. Many will sell now and buy back later.
Buying support will be back when the price dipped to 3.6x. Anyone believes SIA is making good money now?

Ljxxxx      ( Date: 19-Jun-2020 12:50) Posted:

Where do you get the information from? Can give me the link?

hobbes12      ( Date: 19-Jun-2020 11:06) Posted:

Should not go below $4. There is a huge 2.6 mil vol at the $4 bid price.
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Trader130
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21-Jun-2020 08:22     
 
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 Alert Admin 		Haha this one need to check 😂

NT1825      ( Date: 21-Jun-2020 08:18) Posted:

How about SG side when coming back?

Have SG waived the swap test and 14-day quaratine? 

https://www.gov.sg/article/updates-to-border-measures-for-travellers-entering-singapore

Wasim_Trade      ( Date: 21-Jun-2020 06:55) Posted:

   

Malaysia to let Singapore, Brunei nationals in Covid-19 test and quarantine waived
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NT1825
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21-Jun-2020 08:18     
 
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 Alert Admin 		How about SG side when coming back?

Have SG waived the swap test and 14-day quaratine? 

https://www.gov.sg/article/updates-to-border-measures-for-travellers-entering-singapore

Wasim_Trade      ( Date: 21-Jun-2020 06:55) Posted:

   

Malaysia to let Singapore, Brunei nationals in Covid-19 test and quarantine waived



nngeeh      ( Date: 20-Jun-2020 21:20) Posted:

Bro, thanks.

Good luck. My view is neutral as i' m not vested right now. i was vested on SIA shares during the right exercise phrase .... However, as the MCB conversion is 10 yrs later, i am not looking at it right now. However, if the price remain attractive at the seventh or eight year ..... i will do similar analysis to see if its worth investing. 

I do not know how to put a value (or discount) to reward the shareholder to wait  for 10yrs. I still remember the KrisEnergy zero-coupon retail bond redeemable at 100% in 5 or 6 yrs ...which open at very low price. Keppel was one of the major shareholder. I was quite shock at the openning price ... i guess there was a discount for such wait
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Wasim_Trade
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21-Jun-2020 06:55     
 
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 Alert Admin 		   

Malaysia to let Singapore, Brunei nationals in Covid-19 test and quarantine waived



nngeeh      ( Date: 20-Jun-2020 21:20) Posted:

Bro, thanks.

Good luck. My view is neutral as i' m not vested right now. i was vested on SIA shares during the right exercise phrase .... However, as the MCB conversion is 10 yrs later, i am not looking at it right now. However, if the price remain attractive at the seventh or eight year ..... i will do similar analysis to see if its worth investing. 

I do not know how to put a value (or discount) to reward the shareholder to wait  for 10yrs. I still remember the KrisEnergy zero-coupon retail bond redeemable at 100% in 5 or 6 yrs ...which open at very low price. Keppel was one of the major shareholder. I was quite shock at the openning price ... i guess there was a discount for such wait.

MichaelSchenker      ( Date: 20-Jun-2020 20:53) Posted:

Very comprehensive information and analysis. Really benefit a lazy person as myself..haha!

I Guess I have more or less decided to invest in the MCB. Since I am going for long-term, I am also not concern with SIA shares volatility. I just want to park some funds in the MCB with some visibility about the returns, which in all honesty, isnt bad at all.

Thanks again, and I would nominate you as the most valuable member in the forum if there is a chance to do so
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nngeeh
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20-Jun-2020 21:20     
 
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 Alert Admin 		Bro, thanks.

Good luck. My view is neutral as i' m not vested right now. i was vested on SIA shares during the right exercise phrase .... However, as the MCB conversion is 10 yrs later, i am not looking at it right now. However, if the price remain attractive at the seventh or eight year ..... i will do similar analysis to see if its worth investing. 

I do not know how to put a value (or discount) to reward the shareholder to wait  for 10yrs. I still remember the KrisEnergy zero-coupon retail bond redeemable at 100% in 5 or 6 yrs ...which open at very low price. Keppel was one of the major shareholder. I was quite shock at the openning price ... i guess there was a discount for such wait.

MichaelSchenker      ( Date: 20-Jun-2020 20:53) Posted:

Very comprehensive information and analysis. Really benefit a lazy person as myself..haha!

I Guess I have more or less decided to invest in the MCB. Since I am going for long-term, I am also not concern with SIA shares volatility. I just want to park some funds in the MCB with some visibility about the returns, which in all honesty, isnt bad at all.

Thanks again, and I would nominate you as the most valuable member in the forum if there is a chance to do so.

nngeeh      ( Date: 20-Jun-2020 20:26) Posted:

The only part that i' m not sure if at maturity, will SIA be still entitled to redeem and pay cash of 1806,11 or if they want to redeem, they must do so on the 19th semi-annual date and pay $1753.35. If they can only redeem on the 19th semi-annual date, then, the gain based on redeem will be 75.53% (not 80%).

**************************************
In respect of each S$1,000 in principal amount of Rights MCBs shall mean (i) in the case of the conversion of Rights MCBs on the Maturity Date, S$1,806.11, or (ii) in
the case of a redemption of Rights MCBs on a Semi-Annual Date, an amount equivalent to each S$1,000 in principal amount of Rights MCBs multiplied by the
relevant redemption price.The Redemption Price set out below has been calculated on the basis that the annual yield to call for the first 4 years from the date of issue of the Rights MCBs is 4% per annum, and the subsequent 3 years is 5% per annum and the subsequent 3 years is 6% per annum, compounded on a semi-annual basis6.

Semi-Annual Date Redemption Price (%)
1st Semi-Annual Date 102.000
2nd Semi-Annual Date 104.040
3rd Semi-Annual Date 106.121
4th Semi-Annual Date 108.243
5th Semi-Annual Date 110.408
6th Semi-Annual Date 112.616
7th Semi-Annual Date 114.869
8th Semi-Annual Date 117.166
9th Semi-Annual Date 124.886
10th Semi-Annual Date 128.008
11th Semi-Annual Date 131.209
12th Semi-Annual Date 134.489
13th Semi-Annual Date 137.851
14th Semi-Annual Date 141.297
15th Semi-Annual Date 155.797
16th Semi-Annual Date 160.471
17th Semi-Annual Date 165.285
18th Semi-Annual Date 170.243
19th Semi-Annual Date 175.35
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SQueeze
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20-Jun-2020 21:00     
 
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 Alert Admin 		The MCB gets misunderstood again. if current share price is $3 in 2030, MCB may be converted at $4.84 but this not a premium because MCB holders get the principal upsized 80% first and then convert. 
So if you want to compare it directly. $2.67 price mentioned below is the price MCB holders paid for if converted at $4.84. So still a profit at $3 even but marginal. 

The likelihood of MCB holders make loss in 10 years is pretty low i feel. if they are trading at $2.50 means they are trading at value of half of pre-pandemic value. Can it really be 60% worse than now after 10 years? Ok .. may be another pandemic. Now, what is the probablity of that. 

i am betting on it will be at least $4.84 at the time, and also early redemption. 

uiop1223      ( Date: 20-Jun-2020 19:57) Posted:

With so much dilution, im not sure if SIA ever go back $10

Look at capitaland, it never go back to $8 pre 2008 crisis despite years of profit after its rights issue in 2009

There will be risk of loss of SIA redeem mcbs when sia share price is below $4.84

SIA has the right to call for redeem using current sia share price.

So if SIA decides to call for redemption of mcbs when current share price is $3, then mcb holders are forced to pay a premium ( $4.84 ) for the conversion. Note that SIA doesnt not need to pay cash for conversion during this 10yr period. It can convert using shares.

So the mcb is not really a fixed deposits where u get compound interest. The value of mcbs may increase during the 10yr period but will still be worth lesser if the current sia share price is below $4.84

Hence, mcbs will move in same direction as SIA share price.

From what i read, are u guys expecting sia to redeem mcbs by paying cash if sia redeem before maturity? Pls read the rights issue again
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MichaelSchenker
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20-Jun-2020 20:53     
 
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 Alert Admin 		Very comprehensive information and analysis. Really benefit a lazy person as myself..haha!

I Guess I have more or less decided to invest in the MCB. Since I am going for long-term, I am also not concern with SIA shares volatility. I just want to park some funds in the MCB with some visibility about the returns, which in all honesty, isnt bad at all.

Thanks again, and I would nominate you as the most valuable member in the forum if there is a chance to do so.

nngeeh      ( Date: 20-Jun-2020 20:26) Posted:

The only part that i' m not sure if at maturity, will SIA be still entitled to redeem and pay cash of 1806,11 or if they want to redeem, they must do so on the 19th semi-annual date and pay $1753.35. If they can only redeem on the 19th semi-annual date, then, the gain based on redeem will be 75.53% (not 80%).

**************************************
In respect of each S$1,000 in principal amount of Rights MCBs shall mean (i) in the case of the conversion of Rights MCBs on the Maturity Date, S$1,806.11, or (ii) in
the case of a redemption of Rights MCBs on a Semi-Annual Date, an amount equivalent to each S$1,000 in principal amount of Rights MCBs multiplied by the
relevant redemption price.The Redemption Price set out below has been calculated on the basis that the annual yield to call for the first 4 years from the date of issue of the Rights MCBs is 4% per annum, and the subsequent 3 years is 5% per annum and the subsequent 3 years is 6% per annum, compounded on a semi-annual basis6.

Semi-Annual Date Redemption Price (%)
1st Semi-Annual Date 102.000
2nd Semi-Annual Date 104.040
3rd Semi-Annual Date 106.121
4th Semi-Annual Date 108.243
5th Semi-Annual Date 110.408
6th Semi-Annual Date 112.616
7th Semi-Annual Date 114.869
8th Semi-Annual Date 117.166
9th Semi-Annual Date 124.886
10th Semi-Annual Date 128.008
11th Semi-Annual Date 131.209
12th Semi-Annual Date 134.489
13th Semi-Annual Date 137.851
14th Semi-Annual Date 141.297
15th Semi-Annual Date 155.797
16th Semi-Annual Date 160.471
17th Semi-Annual Date 165.285
18th Semi-Annual Date 170.243
19th Semi-Annual Date 175.351

nngeeh      ( Date: 20-Jun-2020 18:51) Posted:

10 years is a long time. It will depends on the assumption of the SIA after 10 yrs.

If i ignore the noises (price going up/ down), and assume SIA returns to the pre-covid price of $9...... which the adjusted price will be $5.4. So, if i invest in SIA at $4 ... the profit will be 35% (5.4/4= 1.35). However, if i invest in MCB at say $1, if SIA didn' t redeem, my profit will be 100% ( 5.4/2.67 = 2.022).  And the current price is 0.95, which means the gain will be 1/0.95x 100%=105%.

Even if SIA redeem the bond at the 10yrs mark, you will still gain 80% (based on $1) or 85% (based on $0.95). 

Both SIA and MCB will be entitled div (but for MCB, it will be in form of adjustment to conversion price if i remember correctly). So, no disadvantage here.

The only catch is that if SIA really surge to say $10, they might just redeem it instead of converting the shares. But even at $10, based on the current price of $4 ... the gain will be just 2.5x or 150% .... vs 85% for MCBs. What is the chance of SIA really surge to $10 (which is equivalent to $20.5 pre-covid)?

From the above perspective ... if it' s based on 10yrs, and share price surging to $5.4, MCB will be a better choice. However, as the conversion will only take place after 10yrs, the MCB price wont really move in tandem with SIA prices....  so, if you are a traders, you can' t take advantage if there is a sudden surge now. However, i believe that maybe into it' s 9 yr ... the MCB price might starts to move up/down more closely to the SIA actual price.

My view
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nngeeh
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20-Jun-2020 20:26     
 
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 Alert Admin 		The only part that i' m not sure if at maturity, will SIA be still entitled to redeem and pay cash of 1806,11 or if they want to redeem, they must do so on the 19th semi-annual date and pay $1753.35. If they can only redeem on the 19th semi-annual date, then, the gain based on redeem will be 75.53% (not 80%).

**************************************
In respect of each S$1,000 in principal amount of Rights MCBs shall mean (i) in the case of the conversion of Rights MCBs on the Maturity Date, S$1,806.11, or (ii) in
the case of a redemption of Rights MCBs on a Semi-Annual Date, an amount equivalent to each S$1,000 in principal amount of Rights MCBs multiplied by the
relevant redemption price.The Redemption Price set out below has been calculated on the basis that the annual yield to call for the first 4 years from the date of issue of the Rights MCBs is 4% per annum, and the subsequent 3 years is 5% per annum and the subsequent 3 years is 6% per annum, compounded on a semi-annual basis6.

Semi-Annual Date Redemption Price (%)
1st Semi-Annual Date 102.000
2nd Semi-Annual Date 104.040
3rd Semi-Annual Date 106.121
4th Semi-Annual Date 108.243
5th Semi-Annual Date 110.408
6th Semi-Annual Date 112.616
7th Semi-Annual Date 114.869
8th Semi-Annual Date 117.166
9th Semi-Annual Date 124.886
10th Semi-Annual Date 128.008
11th Semi-Annual Date 131.209
12th Semi-Annual Date 134.489
13th Semi-Annual Date 137.851
14th Semi-Annual Date 141.297
15th Semi-Annual Date 155.797
16th Semi-Annual Date 160.471
17th Semi-Annual Date 165.285
18th Semi-Annual Date 170.243
19th Semi-Annual Date 175.351

nngeeh      ( Date: 20-Jun-2020 18:51) Posted:

10 years is a long time. It will depends on the assumption of the SIA after 10 yrs.

If i ignore the noises (price going up/ down), and assume SIA returns to the pre-covid price of $9...... which the adjusted price will be $5.4. So, if i invest in SIA at $4 ... the profit will be 35% (5.4/4= 1.35). However, if i invest in MCB at say $1, if SIA didn' t redeem, my profit will be 100% ( 5.4/2.67 = 2.022).  And the current price is 0.95, which means the gain will be 1/0.95x 100%=105%.

Even if SIA redeem the bond at the 10yrs mark, you will still gain 80% (based on $1) or 85% (based on $0.95). 

Both SIA and MCB will be entitled div (but for MCB, it will be in form of adjustment to conversion price if i remember correctly). So, no disadvantage here.

The only catch is that if SIA really surge to say $10, they might just redeem it instead of converting the shares. But even at $10, based on the current price of $4 ... the gain will be just 2.5x or 150% .... vs 85% for MCBs. What is the chance of SIA really surge to $10 (which is equivalent to $20.5 pre-covid)?

From the above perspective ... if it' s based on 10yrs, and share price surging to $5.4, MCB will be a better choice. However, as the conversion will only take place after 10yrs, the MCB price wont really move in tandem with SIA prices....  so, if you are a traders, you can' t take advantage if there is a sudden surge now. However, i believe that maybe into it' s 9 yr ... the MCB price might starts to move up/down more closely to the SIA actual price.

My view.

MichaelSchenker      ( Date: 20-Jun-2020 18:09) Posted:

What is your take at current SIA and MCB prices? Either one of them must be underpriced relative to the other.

Say, if I want to invest for 10 years, which one should I go for, factoring possible dividends for SIA in future?

MCB or SIA for 10 years timeline
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nngeeh
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20-Jun-2020 20:17     
 
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 Alert Admin 		Additional information of the MCB. There will be adjustment due to div .... but if SIA choose to redeem the MCB, then, the adjustment won' t matter and the MCB shareholders will miss out on the div. It will only impact conversion price.

Full Dividend Protection: The Conversion Price will be subject to adjustment in respect of any dividend or distribution made by the Issuer.
Anti-Dilution Protection : Anti-dilution provisions dealing with, inter alia, share consolidations, share splits, distributions, rights issues and bonus issues.

The Rights MCBs may be redeemable at the option of the Issuer in whole or in part on every six-month anniversary of the issue date (each a &ldquo Semi-Annual Date&rdquo ) at the
relevant Accreted Principal Amount as at such Semi-Annual Date.
 

uiop1223      ( Date: 20-Jun-2020 20:04) Posted:

In summary, SIA dont need to fork out any cash even if it redeems before maturity. It just issue more shares to mcb holders. You can still make a loss if SIA choose to convert below $4.84 its not a fixed deposit. SIA may choose to take advantage to redeem when share price below $4 during these 10yrs and holders of mcb have no say

So mcb will move in share direction of SIA share price. It worth more when the underlying share price worth more

Pls DYODD.
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nngeeh
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20-Jun-2020 20:05     
 
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 Alert Admin 		Yes, this is my understanding. If SIA choose to redeem, at the current low interest, the 4%~6% is actually not bad. You can refer to the redemption table ...

********************

Lastly, the MCB is also callable. This means that SIA has the option of redeeming the bonds early on every semi-annual date. In the event that SIA chooses to redeem the bonds before maturity, bondholders will receive a cash payment depending on the redemption price at that time. 

The redemption price is calculated based on the semi-annual date that the MCBs are redeemed, and the respective yield-to-call per annum ranges from 4-6%, compounded on a semi-annual basis. (Table 3).

Table 3: Redemption schedule of the MCBs


Year

Semi-Annual Date

Redemption Price (%)

Annual Yield-To-Call (%)


1

1st

102.000

4.0


1

2nd

104.040

4.0


2

3rd

106.121

4.0


2

4th

108.243

4.0


3

5th

110.408

4.0


3

6th

112.616

4.0


4

7th

114.869

4.0


4

8th

117.166

4.0


5

9th

124.886

5.0


5

10th

128.008

5.0


6

11th

131.209

5.0


6

12th

134.489

5.0


7

13th

137.851

5.0


7

14th

141.297

5.0


8

15th

155.797

6.0


8

16th

160.471

6.0


9

17th

165.285

6.0


9

18th

170.243

6.0


10

19th

175.351

6.0


Source: Company Data


uiop1223      ( Date: 20-Jun-2020 19:57) Posted:

With so much dilution, im not sure if SIA ever go back $10

Look at capitaland, it never go back to $8 pre 2008 crisis despite years of profit after its rights issue in 2009

There will be risk of loss of SIA redeem mcbs when sia share price is below $4.84

SIA has the right to call for redeem using current sia share price.

So if SIA decides to call for redemption of mcbs when current share price is $3, then mcb holders are forced to pay a premium ( $4.84 ) for the conversion. Note that SIA doesnt not need to pay cash for conversion during this 10yr period. It can convert using shares.

So the mcb is not really a fixed deposits where u get compound interest. The value of mcbs may increase during the 10yr period but will still be worth lesser if the current sia share price is below $4.84

Hence, mcbs will move in same direction as SIA share price.

From what i read, are u guys expecting sia to redeem mcbs by paying cash if sia redeem before maturity? Pls read the rights issue again
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uiop1223
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20-Jun-2020 19:57     
 
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 Alert Admin 		With so much dilution, im not sure if SIA ever go back $10

Look at capitaland, it never go back to $8 pre 2008 crisis despite years of profit after its rights issue in 2009

There will be risk of loss of SIA redeem mcbs when sia share price is below $4.84

SIA has the right to call for redeem using current sia share price.

So if SIA decides to call for redemption of mcbs when current share price is $3, then mcb holders are forced to pay a premium ( $4.84 ) for the conversion. Note that SIA doesnt not need to pay cash for conversion during this 10yr period. It can convert using shares.

So the mcb is not really a fixed deposits where u get compound interest. The value of mcbs may increase during the 10yr period but will still be worth lesser if the current sia share price is below $4.84

Hence, mcbs will move in same direction as SIA share price.

From what i read, are u guys expecting sia to redeem mcbs by paying cash if sia redeem before maturity? Pls read the rights issue again
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nngeeh
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20-Jun-2020 19:26     
 
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 Alert Admin 		Thanks. Everything has a price.

With 15B lifeline, SIA will be able to survive. Also, it is within expectation that SIA will continue to lose money in the next 2 yrs. Unless the losses is very extreme, the losses wont impact the SIA price too much.

In short term, it will still be volatile .... due to investors who have not sold their right shares (which they bough cheap or gotten thru excess) .... and if the quarterly report is not that bad ... or vaccines news ....

But if there is surge of price .. say in the third year to 5.14 due to whatever reason, i doubt the MCB will go up in tandem as the conversion will only happen after 10 years. It might adjust in accordance to the year interest that they commit for the MCB. In this scenario, the share will benefit more than MCBs. If it continue to surge to $6 on the fourth year, and SIA choose to redeem, you will only be rewarded with the calculated committed interest.

However, if SIA shares go down but above 2.67 ... but stay that for many years ... as long as there is no more major crisis, the MCB might fare better if you compare to buying the SIA now at $4.

My view. It depends on your investment strategy.

MichaelSchenker      ( Date: 20-Jun-2020 19:14) Posted:

  Very objective and neutral views. You did a great job, obviously with some homework done.

I would probably need to find out if dividends will actually lead to the adjustment of conversion price.

Thank you for sharing. Much appreciated!

nngeeh      ( Date: 20-Jun-2020 18:51) Posted:

10 years is a long time. It will depends on the assumption of the SIA after 10 yrs.

If i ignore the noises (price going up/ down), and assume SIA returns to the pre-covid price of $9...... which the adjusted price will be $5.4. So, if i invest in SIA at $4 ... the profit will be 35% (5.4/4= 1.35). However, if i invest in MCB at say $1, if SIA didn' t redeem, my profit will be 100% ( 5.4/2.67 = 2.022).  And the current price is 0.95, which means the gain will be 1/0.95x 100%=105%.

Even if SIA redeem the bond at the 10yrs mark, you will still gain 80% (based on $1) or 85% (based on $0.95). 

Both SIA and MCB will be entitled div (but for MCB, it will be in form of adjustment to conversion price if i remember correctly). So, no disadvantage here.

The only catch is that if SIA really surge to say $10, they might just redeem it instead of converting the shares. But even at $10, based on the current price of $4 ... the gain will be just 2.5x or 150% .... vs 85% for MCBs. What is the chance of SIA really surge to $10 (which is equivalent to $20.5 pre-covid)?

From the above perspective ... if it' s based on 10yrs, and share price surging to $5.4, MCB will be a better choice. However, as the conversion will only take place after 10yrs, the MCB price wont really move in tandem with SIA prices....  so, if you are a traders, you can' t take advantage if there is a sudden surge now. However, i believe that maybe into it' s 9 yr ... the MCB price might starts to move up/down more closely to the SIA actual price.

My view
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MichaelSchenker
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20-Jun-2020 19:14     
 
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 Alert Admin 		  Very objective and neutral views. You did a great job, obviously with some homework done.

I would probably need to find out if dividends will actually lead to the adjustment of conversion price.

Thank you for sharing. Much appreciated!

nngeeh      ( Date: 20-Jun-2020 18:51) Posted:

10 years is a long time. It will depends on the assumption of the SIA after 10 yrs.

If i ignore the noises (price going up/ down), and assume SIA returns to the pre-covid price of $9...... which the adjusted price will be $5.4. So, if i invest in SIA at $4 ... the profit will be 35% (5.4/4= 1.35). However, if i invest in MCB at say $1, if SIA didn' t redeem, my profit will be 100% ( 5.4/2.67 = 2.022).  And the current price is 0.95, which means the gain will be 1/0.95x 100%=105%.

Even if SIA redeem the bond at the 10yrs mark, you will still gain 80% (based on $1) or 85% (based on $0.95). 

Both SIA and MCB will be entitled div (but for MCB, it will be in form of adjustment to conversion price if i remember correctly). So, no disadvantage here.

The only catch is that if SIA really surge to say $10, they might just redeem it instead of converting the shares. But even at $10, based on the current price of $4 ... the gain will be just 2.5x or 150% .... vs 85% for MCBs. What is the chance of SIA really surge to $10 (which is equivalent to $20.5 pre-covid)?

From the above perspective ... if it' s based on 10yrs, and share price surging to $5.4, MCB will be a better choice. However, as the conversion will only take place after 10yrs, the MCB price wont really move in tandem with SIA prices....  so, if you are a traders, you can' t take advantage if there is a sudden surge now. However, i believe that maybe into it' s 9 yr ... the MCB price might starts to move up/down more closely to the SIA actual price.

My view.

MichaelSchenker      ( Date: 20-Jun-2020 18:09) Posted:

What is your take at current SIA and MCB prices? Either one of them must be underpriced relative to the other.

Say, if I want to invest for 10 years, which one should I go for, factoring possible dividends for SIA in future?

MCB or SIA for 10 years timeline
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nngeeh
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20-Jun-2020 18:51     
 
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 Alert Admin 		10 years is a long time. It will depends on the assumption of the SIA after 10 yrs.

If i ignore the noises (price going up/ down), and assume SIA returns to the pre-covid price of $9...... which the adjusted price will be $5.4. So, if i invest in SIA at $4 ... the profit will be 35% (5.4/4= 1.35). However, if i invest in MCB at say $1, if SIA didn' t redeem, my profit will be 100% ( 5.4/2.67 = 2.022).  And the current price is 0.95, which means the gain will be 1/0.95x 100%=105%.

Even if SIA redeem the bond at the 10yrs mark, you will still gain 80% (based on $1) or 85% (based on $0.95). 

Both SIA and MCB will be entitled div (but for MCB, it will be in form of adjustment to conversion price if i remember correctly). So, no disadvantage here.

The only catch is that if SIA really surge to say $10, they might just redeem it instead of converting the shares. But even at $10, based on the current price of $4 ... the gain will be just 2.5x or 150% .... vs 85% for MCBs. What is the chance of SIA really surge to $10 (which is equivalent to $20.5 pre-covid)?

From the above perspective ... if it' s based on 10yrs, and share price surging to $5.4, MCB will be a better choice. However, as the conversion will only take place after 10yrs, the MCB price wont really move in tandem with SIA prices....  so, if you are a traders, you can' t take advantage if there is a sudden surge now. However, i believe that maybe into it' s 9 yr ... the MCB price might starts to move up/down more closely to the SIA actual price.

My view.

MichaelSchenker      ( Date: 20-Jun-2020 18:09) Posted:

What is your take at current SIA and MCB prices? Either one of them must be underpriced relative to the other.

Say, if I want to invest for 10 years, which one should I go for, factoring possible dividends for SIA in future?

MCB or SIA for 10 years timeline?

nngeeh      ( Date: 20-Jun-2020 11:48) Posted:

For your scenario 1, if the SIA share price plunge to 2.42 ..... why will the MCB pull up the share price?

Don' t forget, shareholders had already paid $1 to subscribe for the MCB this year. In 10 yrs time, there won' t be any further cash injection. The MCB will be converted at the technical price (taking into consideration of yearly increment and conversion at 4.84) of $2.67. There will be alot of shares being pump into the market without any cash.

If you are holding your MCB before being converted to $2.67, and the SIA price at that time was say 2.42 (which is 10% lower), the MCB price should automatically adjust 10% lower and will be traded near 0.9. And if you allow the shares to be converted at $2.67, and then sell in the market at 2.42, you will actually lose close to 10%
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nngeeh
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20-Jun-2020 18:11     
 
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 Alert Admin 		Yes, i agreed. However, under your scenario 1, below, if the share price is trading at $2.42 by 2030, the conversion of MCB into shares will not pull up the share price. In fact, those who invested at rights issue of $1 or off the market above $0.9 ... will be converted at technical price of $2.67 but only able to sell into the market at 2.42.

They will lose money instead after 10 years unless SIA is kind enough to redeem the shares instead of letting it convert into shares. If they redeem it, the investors will get good return instead due to the interest.
 

marketuncle      ( Date: 20-Jun-2020 12:52) Posted:

MCBs are already paid up during the recent rights and bond issue. So for scenario 1, the outstanding MCBs will be converted to SIA share at a price of $4.84 each. MCB holders don' t need to cough up more cash (because they already paid) but they wont' get back cash. Instead, they' ll get additional 37.3 SIA shares for every 100 MCB they hold (whether subscribed during the last fund raising issue or now in the market).
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MichaelSchenker
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20-Jun-2020 18:09     
 
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 Alert Admin 		What is your take at current SIA and MCB prices? Either one of them must be underpriced relative to the other.

Say, if I want to invest for 10 years, which one should I go for, factoring possible dividends for SIA in future?

MCB or SIA for 10 years timeline?

nngeeh      ( Date: 20-Jun-2020 11:48) Posted:

For your scenario 1, if the SIA share price plunge to 2.42 ..... why will the MCB pull up the share price?

Don' t forget, shareholders had already paid $1 to subscribe for the MCB this year. In 10 yrs time, there won' t be any further cash injection. The MCB will be converted at the technical price (taking into consideration of yearly increment and conversion at 4.84) of $2.67. There will be alot of shares being pump into the market without any cash.

If you are holding your MCB before being converted to $2.67, and the SIA price at that time was say 2.42 (which is 10% lower), the MCB price should automatically adjust 10% lower and will be traded near 0.9. And if you allow the shares to be converted at $2.67, and then sell in the market at 2.42, you will actually lose close to 10%.

marketuncle      ( Date: 20-Jun-2020 10:37) Posted:

How to value MCBs? As the MCBs trade below the dollar, do they become more attractive?
After the last rights issue, there were 150 new shares and 295 MCBs issued for every existing 100 shares, bring the total to 250 shares and 295 MCBs yet to be converted to shares. So long as SIA redeem the MCB within 10 years, each provides a compounded annual yield of 6%. However, if the MCBs are not redeemed, every 100 will be converted at the principal value of $180.611 to 37.3 SIA shares priced at $4.84 each (10% premium to post rights TERP). 
Let&rsquo s consider two extreme scenarios on the MCB conversion:

1. SIA shares plunged by 50% to $2.42 by 2030. 

So the MCB conversion will technically pull up the share price to $3.73, i.e. (250 x $2.42 + 295 x $4.84)/(250 + 295) = $3.73. Every $100 invested in MCB at $1 now will result in $139.13, i.e. 37.3 x $3.73. Giving a compounded annual yield of just 3.4%, nearly half the reported annual yield of the MCB.

2. SIA shares doubled to $9.68 by 2030. 
So the MCB conversion will technically pull down the share price to $7.06, i.e. (250 x $9.68 + 295 x $4.84)/(250 + 295) = $7.06. Every $100 invested in MCB at $1 now will result in $263.34, i.e. 37.3 x $7.06. Giving a compounded annual yield of 10.17%.

Thus, the real annual yield of the MCB if not redeemed, will depend very much on the share price of SIA shares then. The likely scenario 10 years on will probably be somewhere in between and the lower the current MCB trades below the dollar, the more attractive the compounded annual yield. For example, the MCBs last traded at 94.5 cts, implying a compounded annual yield of 3.9% even if the worse scenario as mentioned above occurs. To retain the original 6% annual yield even if this happens, the MCB will have to trade around 75 cents.

In short, the MCB' s current ROI is about 3.9% to 10+%. It will be range, rather than a fixed number. 


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marketuncle
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20-Jun-2020 12:52     
 
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 Alert Admin 		MCBs are already paid up during the recent rights and bond issue. So for scenario 1, the outstanding MCBs will be converted to SIA share at a price of $4.84 each. MCB holders don' t need to cough up more cash (because they already paid) but they wont' get back cash. Instead, they' ll get additional 37.3 SIA shares for every 100 MCB they hold (whether subscribed during the last fund raising issue or now in the market).
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nngeeh
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20-Jun-2020 11:48     
 
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 Alert Admin 		For your scenario 1, if the SIA share price plunge to 2.42 ..... why will the MCB pull up the share price?

Don' t forget, shareholders had already paid $1 to subscribe for the MCB this year. In 10 yrs time, there won' t be any further cash injection. The MCB will be converted at the technical price (taking into consideration of yearly increment and conversion at 4.84) of $2.67. There will be alot of shares being pump into the market without any cash.

If you are holding your MCB before being converted to $2.67, and the SIA price at that time was say 2.42 (which is 10% lower), the MCB price should automatically adjust 10% lower and will be traded near 0.9. And if you allow the shares to be converted at $2.67, and then sell in the market at 2.42, you will actually lose close to 10%.

marketuncle      ( Date: 20-Jun-2020 10:37) Posted:

How to value MCBs? As the MCBs trade below the dollar, do they become more attractive?
After the last rights issue, there were 150 new shares and 295 MCBs issued for every existing 100 shares, bring the total to 250 shares and 295 MCBs yet to be converted to shares. So long as SIA redeem the MCB within 10 years, each provides a compounded annual yield of 6%. However, if the MCBs are not redeemed, every 100 will be converted at the principal value of $180.611 to 37.3 SIA shares priced at $4.84 each (10% premium to post rights TERP). 
Let&rsquo s consider two extreme scenarios on the MCB conversion:

1. SIA shares plunged by 50% to $2.42 by 2030. 

So the MCB conversion will technically pull up the share price to $3.73, i.e. (250 x $2.42 + 295 x $4.84)/(250 + 295) = $3.73. Every $100 invested in MCB at $1 now will result in $139.13, i.e. 37.3 x $3.73. Giving a compounded annual yield of just 3.4%, nearly half the reported annual yield of the MCB.

2. SIA shares doubled to $9.68 by 2030. 
So the MCB conversion will technically pull down the share price to $7.06, i.e. (250 x $9.68 + 295 x $4.84)/(250 + 295) = $7.06. Every $100 invested in MCB at $1 now will result in $263.34, i.e. 37.3 x $7.06. Giving a compounded annual yield of 10.17%.

Thus, the real annual yield of the MCB if not redeemed, will depend very much on the share price of SIA shares then. The likely scenario 10 years on will probably be somewhere in between and the lower the current MCB trades below the dollar, the more attractive the compounded annual yield. For example, the MCBs last traded at 94.5 cts, implying a compounded annual yield of 3.9% even if the worse scenario as mentioned above occurs. To retain the original 6% annual yield even if this happens, the MCB will have to trade around 75 cents.

In short, the MCB' s current ROI is about 3.9% to 10+%. It will be range, rather than a fixed number. 

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