Monday, March 6, 2017

LBI Capital Bhd (Rm 1.21)

LBICap is a small property company with only 75 millions Rm 1.00 shares. Its only ongoing development project is in Section 14, Petaling Jaya comprising 11 units of bungalow lot. Nothing is interesting.

Its latest quarterly earning is only 0.01 sen a share. Net assets at Rm 1.71. With about Rm 5 million cash and Rm 26 million of borrow. Nothing is impressive.

But I find its chart technically quite interesting. LBICap has its peak in January 2014. Since then it has completed a 3-wave A, 3-wave B and by January 2017 it has completed another 3-wave down and started to rebound.

From its current level, I can see two possibilities.

The first possibility is as shown below, a 3-3-3-3-3 A-B-C-D-E consolidation. The current rebound is wave D that is likely to reach Rm1.50.


The second possibility is a 3-3-5 A-B-C formation.


The current rebound is wave 4 of C with likely target of Rm1.32. What is so interesting ?

The answer is its Warrant-A.

This warrant is going to expire on 17th April, 2018. Not much time left. Each warrant can be converted into 1 ordinary share at Rm 1.00 (Conversion price).

The interesting thing is that, at today's closing price of 18.5 sens for the warrant and Rm1.21 for LBICap, the warrant has a negative premium of 2.5 sens. For every one sen up for LBICap, I expect its warrant to move up one sen in tandem.

Even for the second possibility with wave 4's target of Rm1.32, 11 sens up for LBICap, a similar 11 sens up for the Warrant-A from 18.5 sens to 29.5 sens is 59% gain. This is interesting, right?

The next big question is, "will it move as what I have projected ?"

I hope it will, I pray that it will but I really don't know whether it will. In stock market, anything is possible. That is why the market can exist.
 
And to be frank, sometimes I too was caught on the wrong foot.


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