junior's toks

Stock Market is a Dirty Game

Sarawak Concrete Industries Bhd’s (SCIB) steep 30.23% discount for its private placement of shares has not gone down well with analysts and investors.
Analysts and fund managers say the deal is not fair to existing shareholders as they will lose out on the huge discount given to the private placement. Last Wednesday, SCIB announced that it had fixed the issue price of the placement shares of up to 10% of its share capital at RM1.20 each, a discount to the five-day weighted average market price of RM1.72.

Reacting to the above news, SCIB's share price down again this morning.

Well, I got it wrong with Habib by saying that the price would come down after the acquisition and right issue announcement. The rationale was simple then - Habib paid almost full value for a new business, and share price gained approx. 150% which to me should not be sustainable. Plus the private placement to SCOMI at a much lower price, I would not touch Habib. But Habib did not look back. I made one clear mistake. A big mistake. I underestimated the power of Habib's 'Gangster' which could easily influence a 'connered' stock like Habib. Habib did not look back. The price needs to stay high so that Scomi could get the necessary financing to subscribe to the new shares and complete the whole deal.

How about SCIB? I would only say - "Similar stock, disimilar fate". I do not want to discuss whether 5 days weighted average is fair or 30 days is more appropriate (er....er...becaues i dun know which one is better), but looking at SCIB's average price of around RM 2.50 prior to the recent fall, the RM 1.20 does indeed looks cheap at first glance (of course I did not do a valuation....).

But why didn't SCIB react the same way like Habib? Well, if KLSE was as 'clean' and 'fundamental' as we would like it to be, no one will screw any stock in KLSE lor.

It is like you only do one night stand with a slut....if the girl/guy is not slutty, you will not screw her/him, would you?

Junior

posted by Junior @ 11:50 AM