Tuesday, August 25, 2009

Sihuan Pharma (BL5) Cash Offer @ 27.5% premium


Normally, I only post on Monday and Thursday, but I had to post as I saw the "Cash Offer" on Sihuan at a premium of 27.5%(0.975) over its last price at 0.765. I bought 10 lots @ 0.955 since that is last price I checked. I am not sure if I can profit and the profit seems to be only around 1%. However, 1% in a few weeks/months seems good, provided the cash offer do goes through.

Investment tips:

The announcement was made last night, so there might be a slight chance of getting it even cheaper this morning. However, I was alerted only at noon where the price was already at 0.955. I probably need my alert to be setup more frequently since time is the key in the short window of opportunity. Furthermore, I cannot be sure if the price immediately goes to 0.955 when the stock market open, or there is really a window of opportunity to earn a quick profit.

Anyway, I calulated the amount I bought(I used POEMS profit/loss to calculate):

10,000 @ 0.955 = S$9550.00
Total costs (include sgx charges) = S$9583.47.

If it does sell @ 0.975,
10,000 @ 0.975 = S$9750.00
Total amount (include sgx charges) = S$9715.83.

Overall Profit = S$132.36,
Total investment = S$9583.47(buying),
Profit Margin = 1.38%.

I could have bought more but was worried my calculation was wrong. I am thinking why will people sell the stock if it can be worth more? Perhaps, those without the information update or too lazy to care the few %? Only time will tell if I profit from this deal.

References:

  1. Cash Offer of Sihuan Pharma
  2. SGX Profit/Loss Calculator

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