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Call warrant over VSI and AIRASIA took centre stage

Warrants Commentary (25 Feb to 1 Mar 2019)

Last week, call warrants over V.S. Industry (VSI) have garnered investors’ interests as the underlying share price closed at one-month high of RM1.09 last Friday, gaining 10.6% week-on-week (w-o-w). VS-C10 emerged as the top traded warrant over Malaysian counters last week, recording a total trading volume of 50.9 mil. units. As the VSI’s share price recorded the most gains on Friday, investors who accumulated VS-C10 in the past few weeks took profit on their positions, selling back 2.6 mil. units on the same day.

Last Friday, VSI announced on Bursa Malaysia that the company, through its wholly-owned subsidiary, Guardian, entered into a 3-year agreement with the U.S. company, BITCBV to manufacture a certain homecare products that bear the BISSEL brand on box-build basis. Under the agreement, Guardian will manufacture, assemble, package, label, test and sell the product to BISSEL.  In the same announcement, VSI mentioned that the agreement would contribute positively towards the earnings of the company from financial year ending 31 July 2020 onwards, and this agreement will have no effect on the issued capital of the company.

AIRASIA-C77 was another call warrant that came into the spotlight as AirAsia’s share price was hit by turbulence last week.  From Wednesday to Friday, AirAsia’s share price loss 11.6% in total after the low-cost airline reported a net loss of RM395.0 mil. in 4Q18, the first quarterly loss in more than three years on the back of higher cost (The Star, 28 Feb).  Bargain hunters were seen taking advantage of the weak share price, taking home over 1.0 mil. units of AIRASIA-C77 when the mother share price plunged 8.9% on Thursday (28 Feb). The bid of price of AIRASIA-C77 also tracked the underlying’s movement closely, falling 44.0% to close at RM0.070 last Friday.

Elsewhere, two call warrants over the Hang Seng Index (HSI), HSI-C3V and HSI-C3W continued to be actively traded with investors trading over 200 mil. units each; both warrants fell 22.2% and 10.4% w-o-w, respectively. Meanwhile, the HSI erased the 1.1% losses earlier in the week to finish at 28,812.2 points last Friday.

Top stock warrants by volume traded:

Warrant name Volume
Issuer Exercise price (MYR) Expiry date
VSI-C10 50.9 Macquarie 1.20 31 Jul 19
AIRASIA-C77 39.9 Macquarie 3.40 31 Jul 19
FGV-C63 34.4 Macquarie 0.95 28 Jun 19
GAMUDA-C61 27.5 Macquarie 3.20 31 May 19
MYEG-C55 26.1 Macquarie 1.20 28 Jun 19

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Provided for Malaysian residents information only. It is not an offer or recommendation to trade and is not research material. Past performance is not indicative of future performance. You should make your own assessment and seek professional advice.