Basis Share information

投资是一门有趣的学问。虽然理论不等于实践，但是懂得一点投资方面的知识会增加你投资成功的可能性。
碑斯麦说过，每个笨蛋都会从自己的经验中吸取教训，聪明的人侧从别人的经验中吸取教训，这就是为什么投资者必须要学习后实践。
投资前必须拥有相关知识，准备然后加上经验。说到完，决定你投资成败的不是股市而是投资者本身。



Some basis share knowledge that a new investor need to knows


1) P/E
2) Warrant, call warrant.

1) What is P/E


Market price of a share basically represents an assessment of investors.
Values of the P/E implied an expected future earning of a particular company.
For example, a particular company’s market share price in Rm10 and it EPS for previous financial year was Rm2. Which mean P/E is 5 .
This indicates that an investor is willing to pay 5 multiple market prices to acquire a company share.
Let assume, if the EPS of a company remain constant in subsequent year, which mean an investor have to wait 5 years in order to get capital return.
Normally for a company which has a high P/E, this is because investors expected a company able to earn a higher rate of profit in a following year.
So, Value of a P/E is comparable to a company projected rate of return for it subsequent year.
Let said, if expected rate of return for Public bank for year 2008 is 10%, if its P/E currently is lower that 10, acquire the share now is more valuable.
Anywhere, an investor should not acquire a share of a company that has a very high P/E value such as 50, 60, and 70.
For instance, a company which is selling Digital Camera, the P/E currently is 100 and the company last year profit was Rm 6 million, even thought the company has a very bright prospect in future, anywhere the 100 P/E mean, investors are trying to forecast the company profit in the following year more than the profit that a oil company could earn.
If a company currently just focused domestic market, which mean each family in Malaysia has to buy 4 digital cameras.
Anywhere, we cannot assess a company P/E without compared to other companies P/E which are involved in the same industry.
Different industry have it different P/E value, we should compared the P/E value of a company to other which is in the same industry, same level of companies.

Besides share that are several instrument that listed on board.

There are

1) warrant (WA, WB, WC) -

2) Call warrant ( CA, CB..)

3) Convertible unsecured loan stock or secured loan stock

( LA,LB,LC)

4) Preference shares



Let me explain more detailed…….

1) Warrant (WA,WB,WC) ( Derivative security)

- Give the holder the right (not obligation) to purchase Securities at a specific price at a specific time that determined by issuer. - issued by company itself. - have 2 features a) exercise /strike price b) expiry／maturity period - A warrant lifetime is measured in years. For instance, 2 years and above. -When the warrant issued by the company is exercised, the company issues new shares of stock, so the number of outstanding shares increases. Therefore, EPS of the company will be diluted. - risk of purchase warrant is the holder may losing the full purchase price of the warrant and all transaction cost if the holder doesn’t realized or convert into mother share at maturity date.

2) Call warrant (CA,CB) ( Derivative security)

- Give the holder the right (not obligation) to purchase Securities at a specific price at a specific time that determined by issuer. - is not issued by company itself but issued by third-party.For example, merchant bank. - have 2 features a) exercise /strike price b) expiry／maturity period - A warrant lifetime is measured in months. - Earning dilution does not occurred. - risk of purchase warrant is the holder may losing the full purchase price of the warrant and all transaction cost if the holder doesn’t realized or convert into mother share at maturity date.