Do You Drink Ho Yan Hor?

Company Background – Hovid Berhad

hyh.jpg

Their globalization corporation stemmed from a humble herbal stall. Along with its rich heritage, Hovid (formerly known as Ho Yan Hor) carries with her years of invaluable experience in the pharmaceutical industry. Dating back to 1945 when the business was first established, Hovid’s only commodity was Ho Yan Hor herbal Tea, concoted by its founder, Dr. Ho Kai Cheong. The popularity of the tea soon made it a household name in Malaysia.

Current Price Trend – Hovid Berhad

Hovid_BB.png

Since Dec 15, its share price has trended lower, currently at the edge of the lower bound of the Bollinger Band. Consequently, this may lead to potential rebound in the share price. In respect of analysts’ price target of Hovid, this ranges from RM0.43 till RM0.555 (based on year 2015):

Hovid_PT.png

It appears that there is room for potential price appreciation for Hovid.

Trading Opportunities Using Hovid Warrant (“Hovid-WB”)

One way of capitalising on the potential rebound of Hovid is to trade via its warrants Hovid-WB, which are currently trading at zero warrant premium:

Price (MYR) 0.1800 Implied Gearing 1.766 Conversion Ratio 1 Share : 1 Warrant(s)
Premium (%) 0 Simple Gearing 1.766 Expiry Date

(Countdown)

05 Jun 2018 (759 days)
Outstanding Warrants 330,398,629 Underlyings (Price) HOVID (0.415)
Listing Date
Exchange Code 7213WB.MY ISIN Code MYL7213WBS61

Based on a simple desktop analysis, the following relationship is established between the share prices of Hovid-WB and Hovid:

Hovid_RR.png

Based on the above statistical relationship:

Share price (Hovid-CB) = -0.09811 + 0.8244 x (Share Price of Hovid)

Hovid_F.png

Currently, it appears that Hovid-CB’s share price of RM0.235 is relatively lower than its forecast value of RM0.244, with a 95%-confidence interval of RM.213 – RM0.275.

If Hovid’s share price increases from its current price of RM0.415 to:

  1. RM0.43: Hovid-CB -> RM0.26
  2. RM0.45: Hovid-CB -> RM0.27
  3. RM0.48: Hovid-CB -> RM0.30
  4. RM0.51: Hovid-CB -> RM0.32
  5. RM0.55: Hovid-CB -> RM0.36

The good thing is that Hovid-CB expires in Jun 2018 (approx. 2 years from now). Ample time to ride through the market volatility. However, we need to be mindful of the  impacts  resulting from the implementation of TPPA on the pharmaceutical sector (http://www.theborneopost.com/2015/10/15/tpp-to-impact-pharmaceutical-sector/).

DISCLAIMER: THIS SITE IS FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Author: Ken Utau

Markets Observer + Food Lover

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