From today on, we will be bringing you weekly warrant commentaries! courtesy of our friends over at Macquarie Warrants!
Warrants Commentary (19 Feb to 23 Feb)
Warrants over Hibiscus in the limelight
Last week, the warrants market was active as investors returned from the Chinese New Year holiday. The overall warrants turnover jumped 124% to RM543.1M from RM242.0M in the previous week. Warrants over Malaysian counters stole the show last week, surpassing the Hang Seng Index (HSI) warrants which have been dominating the warrants space for the past few weeks.
Malaysia’s oil & gas (O&G) company, Hibiscus Petroleum (“Hibiscus”) was one of the companies that showed strong performance last week. On Monday (19 Feb), Hibiscus started the week on a bullish note as the share price broke the RM1.00 mark, soaring 10.1% to close at RM1.04. However, following that, the share price reversed its gain, falling 7.3% over two days before rebounding 1.0% to close at RM0.975 on Friday (23 Feb).
Hibiscus continued its bullish performance on the back of securing a 50% stake in the North Sabah Oilfield from Royal Dutch Shell Plc (Shell). Upon completion of the stake purchase from Shell, Hibiscus will double up its oil production to 9,000 barrels per day (bpd) from 4,000 bpd. Hibiscus also recently posted healthy financial results as its 2Q18 net profit saw an increase of 3.4% to RM11.0M, mainly contributed by Anasuria Hibiscus UK, as its revenue surged 21% to RM76.1M.
A newly listed call warrant over Hibiscus, HIBISCS-CC, grabbed the limelight last week, emerging as the most popular warrant last week. Bullish investors took home 6.7M units out of the 106.9M units of HIBISCS-CC traded on Monday but were seen selling back 9.1M units on Tuesday. Overall, investors traded more than 253.8M units as the warrant’s bid price recorded an increase of 16.7% for the week. Among all warrants over Hibiscus listed on Bursa, HIBISCS-CC has the highest exercise price at RM1.40. Warrants with a higher exercise price tend to have a higher gearing level and a higher level of risk than warrants with a lower exercise price (all other factors held constant). This is because warrants with higher gearing tend to move in greater percentages than warrants with lower gearing.
Elsewhere, the HSI surged 0.5% week-on-week to close at 31,267.2 points. Trading in HSI warrants recorded a turnover of RM127.4M. The most notable HSI warrant was the HSI put HSI-H2W as investors traded 77.5M units for the week. Due to high demand, this warrant is sold out as investors bought all 16.0M units of the issuer’s inventory. Investors should exercise caution when trading the sold-out warrant as the OFFER price is widened. Investors should also note that in some circumstances the market BID price may be inflated as other investors may be bidding higher than the issuer’s bid price.
Top 5 warrants by volume:
Exercise Price (RM)
|HIBISCS-CC||253.8||Macquarie||1.40||28 Sep 2018|
|HENGYUAN-CO||127.1||CIMB||18.00||31 Oct 2018|
|AAX-C11||122.3||RHB||0.400||21 Jun 2018|
|DRBHCOM-C37||80.7||CIMB||1.85||30 Mar 2018|
|HIBISCS-CA||77.7||Maybank||1.00||30 Nov 2018|
To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.