Tuesday, August 27, 2013

SPAC Boom! (Part 4) : How worst could it be?

1st QE tappering and foreign fund flight
2nd South East Asia currency crisis???
3rd US to hit Debt Ceiling latest by Mid of October 2013
4th US may shoot missiles to Syria as soon as this Thursday

Has all the issues above scares you???

Will the market fall somemore? What is the best time to buy??? What is the best price to get blue chips? It's really a tough question as the market is now very shaky and we are not sure whether which blue chips will be hit down if the crisis really comes.

As a believer of SPAC, I will still tell you that the SPAC is a best buy at this juncture. Why???

1st SPAC always have 90% of their IPO proceeds with their trustee as long as they haven't purchase any assets. 

According to the theory above, we can see that CLIQ and SONA still has 90% of their cash in the "vault" as long as they haven't purchase any asset. Which mean CLIQ has RM0.675 in the bank while SONA has RM0.45 in the bank.

CLIQ
Looking at their closing price today, where CLIQ close at RM0.62. We can say that buying CLIQ now is equals to using RM0.62 to buy a share that has RM0.675 cash in it. Is this value investment? Is it worth?
On the other hand, if the SPAC fails to acquire any asset within 3 years which is 10 April 2016 that means they are going to repay you all the money inculde the interest that the money earn for 3 years.

Imagine that the interest rate that being earn by that amount of money is just 2% per annum.
 From 10 April 2013 til 10 April 2014, your money become RM0.6885 (RM0.675*1.02).
 From 10 April 2014 til 10 April 2015, your money become RM0.702227 (RM0.6885*1.02).
 From 10 April 2015 til 10 April 2016, your money become RM0.716315 (RM0.702227*1.02).

The gain that you make from this investment will be
 RM0.716 - RM0.62 = RM0.096 or 0.096/0.62 = 15.48%. 15.48% in 3 years, which will be averagely 5% a year. Good investment?

SONA
Looking at their closing price today, where SONA close at RM0.39. We can say that buying SONA now is equals to using RM0.39 to buy a share that has RM0.45 cash in it. Is this value investment? Is it worth?
On the other hand, if the SPAC fails to acquire any asset within 3 years which is 30 July 2016 that means they are going to repay you all the money inculde the interest that the money earn for 3 years.

Imagine that the interest rate that being earn by that amount of money is just 2% per annum.
 From 30 July 2013 til 30 July 2014, your money become RM0.459 (RM0.45*1.02).
 From 30 July 2014 til 30 July2015, your money become RM0.46818 (RM0.459*1.02).
 From 30 July 2015 til 30 July 2016, your money become RM0.47754 (RM0.46818*1.02).

The gain that you make from this investment will be
 RM0.47754 - RM0.39 = RM0.08754 or 0.08754/0.39 = 22.45%. 22.45% in 3 years, which will be averagely 7% a year. Good investment?

According to the simple calculations above, Sona is definitely a good buy compare to CLIQ 
Well, that was assuming that they failed to acquire any assets. Do U think they will failed to do so? As we know, CLIQ is going for assets that is close to production and its about 4 months since listed. I believe they will announce their target after the market had calm down as thats a better time and much more easier for them to push the price instead of now, but will U be able to buy at a cheaper price? or they will rebound soon? These are really hard question to tell, if not, I would have already asked you to sell everything before the sell down. LoL..

HOW WORST COULD IT BE? 

Looking at the situation now, its more like a panic sell down by the retailers after getting affected by the Foreign capital flight. Its normal for RM to drop as the foreign funds flowing out as they have to change it back to USD to repay their debt for carry trade. They can't pay it with RM right?

Good Luck and Huat ah! 

 Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions




4 comments:

ArifinLatif Consulting said...

Bagi towkay2 SPACs..... ni ada peluang beli QA (aset o&g) kat indonesia lah... bayar dlm rupiah je! amacam??? Banyak peluang di Sunda shelf tu... saya rasalah!

ArifinLatif Consulting said...

When US decided to go to war against Saddam Hussein in Gulf War I & II, the generals on Wall Street were making damn lots of $$$$ AND they wore Armani suits! Got the message NOW with Obama going to attack Syria?????
Why only now? Butakah dunia???? Ooops lupa dunia memang pelupa! OIC pulak???? Mana dia OIC - oh I see?

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