No brainer: Abacus explains the value of TECH warrants

Jul 19, 2021

No brainer: Abacus explains the value of TECH warrants

Published by Bilyonaryo

Shareholders of Cirtek Holdings Philippines Corp. are probably scratching their heads over the stock’s underwhelming performance in the middle of its P1.4B stock rights offering.

Shares of TECH closed at P5.21 per share during Friday’s trading, down 25 percent from an intra-day high and below the P5.50 subscription price for the SRO.

Should shareholders subscribe when they can buy shares for cheaper at market?

Nicky Franco, the head of research of Abacus Securities, said taking up the TECH rights with its bonus warrants should be a “no brainer.”

Franco estimated that the warrants, which comes with the subscription of the rights shares, were worth between P0.99 and P2.82 based on Bloomberg’s warrant valuation model.

This means that even at P5.21 plus the minimum P.99, the stock is well above the strike price of P5.50. The warrants come free of charge, as a bonus, to those who subscribe to the offering.

Franco cited the history of Leisure Resorts and its warrants, LRW, to illustrate his point that share price should not only be compared to the strike price.

The report pointed out that LRW, which has an exercise price of P15, rose to as high as P7 even though shares of LR itself maxed out at P12.

Franco expected TECH’s second quarter earnings “to be as good” as the first three months when the firm posted wide margins and on the back of higher orders (boosted by the current chip shortage) and the extension of Quintel’s master supply agreement with two major US telcos (five-years from the original one year deal).

Abacus Capital and Investment and PNB Capital Investment are TECH joint issue managers and lead underwriters.

  • Jul 05, 2021

    Cirtek receives PSE nod for stock rights offer, warrants

    Business World

    CIRTEK Holdings Philippines Corp. received the approval of The Philippine Stock Exchange, Inc. (PSE) for its stock rights offering with bonus detachable warrants.

    The company said in regulatory filing on Wednesday that shareholders eligible to participate in the stock rights offering should pass the requisite documents and participate during the offer period scheduled on July 12 to July 22.

    Listing for both the rights shares and the bonus detachable warrants are tentatively scheduled for Aug. 16, while the ex-rights date and record date will be on July 2 and July 7, respectively...

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  • Aug 16, 2021

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    Published by Manila Bulletin

    Cirtek Holdings Philippines Corporation listed at the Philippine Stock Exchange its stock rights offering (SRO) shares worth P1.37 billion as well as the bonus detachable warrants that came with them.

    The SRO consisted of 249.44 million common shares sold at an offer price of 5.50 per Entitlement Right at the ratio of 1 Entitlement Right for every 1.68 common shares to eligible shareholders of record as of 7 July 2021.

    In addition to the rights shares, Cirtek issued 249.44 million Bonus Detachable Warrants free of charge. The Exercise Price for the Bonus Detachable...

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  • Jul 08, 2020

    Press Release  -  July 08, 2020

    Press Release - July 08, 2020

    Quintel USA, Inc., a subsidiary of Cirtek Holdings Philippines Corp (CHPC)

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