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Kenanga issues seven new call warrants

KUALA LUMPUR: Kenanga Investment Bank Bhd has issued seven new European style cash-settled call warrants over the ordinary shares of AirAsia Bhd (fundamental:1.30; valuation: 1.80), Hartalega Holdings Bhd (fundamental:3; valuation: 0.3), IJM Corp Bhd (fundamental:1.6; valuation: 2.4), Karex Bhd (fundamental:2.55; valuation: 0.3), Scientex Bhd (fundamental:1.7; valuation: 2.4), SP Setia Bhd (fundamental:1.4; valuation: 1.2) and Tune Ins Holdings Bhd (fundamental: 2.7; valuation: 0.65).

The call warrants, listed on Bursa’s structured warrants board yesterday (Jan 29), are priced at 15 sen each, with tenures of about 10 months and an issue size of up to 100 million each, it said in a statement.

The warrants are priced at 15 sen each, with effective gearing ranging from 2.37X to 5.14X. The focus are on properties, industrial and consumer products.

Kenanga rationalised that the government’s move to maintain the RM48.5 billion development expenditure for Budget 2015, would benefit the construction sector.

“Despite falling oil prices, the government continues to maintain its RM48.5 billion development expenditure that was announced in the Budget 2015. The government recently announced it would also give priority to local contractors to undertake the reconstruction of infrastructure damage caused by the recent flood disaster, at approximately RM2.9 billion. This will benefit the construction sector,” it said.

Meanwhile, Kenanga added that rubber products sector is expected to remain bullish, with the global glove consumption expected to remain strong.

“This is led by demand from the healthcare segment and as such, is anticipated to expand 8% and 10% per annum. Players are also generally facing full capacity constraint,” it said.

Kenanga believes that latex products manufactures will be able to gain significant global market share, with its strong operating structure and ability to maintain cost efficiency and pricing power.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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