Category: Money tips Release Date: 2006-11-03
August 22, Baosteel will be available first only to warrants, followed by the Yangtze River to the price of electricity is expected to launch warrants for the two A-share market warrants a pioneer, how to judge their value?
Yangtze Power's C of E is due to be distributed free of charge, in order to facilitate discussion, it may be an example. Suppose an investor holds one million shares of China Yangtze Power, according to the Yangtze River to the price of electricity program, get 1,500 copies of warrants, because of the price of program commitments, the warrants can be 1.80 yuan / copy sold to the Three Gorges Project Corporation, therefore, once the warrants listed circulation, the lowest price are 1.80 yuan / copies, circulation after the price fluctuations will depend on investors in the next 18 months, Yangtze Power's share price valuation to what exactly the price.
Based on the current forecast of the industry report, most industry analysts tend to China Yangtze Power in the 2006 diluted earnings per share from 0.45 to 0.50 yuan, to 18 times earnings projections over the next 18-month target price of 8.10 yuan to the between 9 yuan, while the next 18 months later, the warrants expire, holders of warrants to investors to 5.5 yuan / copy Yangtze Power to buy a share, a then 18-month stock price volatility within the range of the maximum value of 8.10 9 yuan yuan to 5.5 yuan less, that is, between 2.60 to 3.50 yuan. Also out of this within the next 18 months, the lowest price Yangtze Power warrants range was 1.80 yuan, the highest price range of 3.50 yuan.
Investors also clear operational strategy, if the warrant price is lower than Yangtze Power 1.80 yuan, it is almost no risk, buy and hold, if the 1.80 to 3.50 yuan to fluctuate in accordance with prevailing market conditions may be as well as the circumstances of positive share price to buy or sell basis. If the investor warrants held by 1500 has not been bought, maturity-line power, if Yangtze Power's share price in the 9 yuan, then the degree of investor profit 1500 (9-5.50), the final result is 5250 yuan, If there are new investors in 1500 bought 1.80 yuan, then the maturity of the China Yangtze Power is also the right line 9 yuan, then the degree of investor profit 1500 (9-5.50-1.80), the end result is the 2550 yuan, a profit margin of 2550/1.8 * 1500, the result is 94.44%. However, if the maturity of the two lines right below the market price of 7.30 yuan, then the investors losing money.
Baosteel Warrants calculation
A similar analogy can be Baosteel, Baoshan Iron and Steel shares are available to one for every 10 shares of stock warrants, if an investor holds 10,000 shares of Baoshan Iron & Steel, then get 1000 copies of warrants, as determined repurchase Baosteel recognition stock certificate, therefore, warrants a number of shares to determine the relative trouble. However, Baosteel set an exercise price 4.50 yuan, but if the current stock price automatically at the ex reference price of 4.20 yuan or less about, that is, the spread between the two can be used as the price of warrants, therefore, the warrant price of Baosteel, after circulation of secondary market pricing of roughly 0.30 yuan / or so.
If the investor has the right to hold to maturity OK, and the right line of the secondary market price at 4.50 yuan, then the corresponding profit margins for 1000 (4.50-4.20), the result is 300. If an investor in the middle to 0.30 yuan / copy price to buy 1,000 copies, if the future price of the secondary market at 4.50 yuan, then the investor is a loss, because the exercise price of 4.50 yuan, the secondary market price on 4.50 yuan, 0.30 yuan / copies of the cost is a loss for nothing. However, if the right line of the secondary market price of 5 yuan, then returns to investors is that the 1000 (5-4.50-0.30), the result is 200 yuan, the final profit 200/1000 * 0.30, the result is 66.66%, from This can be seen that the leverage effect of warrants, it is worth looking forward to.
