KINV

Sell @ $0.255

There was a hint in the pre-open Buy / Sell Q that Shares Buy Back will be in action. It was very close to the calculated Max Average Buy Back Price of $0.2531 ie 62% @ $0.255 ; 38% @ $0.25. I placed my regular sell order @ $0.25 and today, it got done just after lunch (earlier than usual). The CP is Kim Eng, not the regular one from Phillip. I suspect Traders may be jumping in when their Charts is telling them to… (Increasing Price at healthy volume).

After mkt close, Shares Buy Back SGX Annc,

• 1,019,000 @ $0.25178
• Vol = 1,812,000 ; Range = 25 to 26ct (fm LS,  only 1 lot at 26ct)

For tomorrow, Max Buy Back Average Price = $0.2583 or 34% @ 25.5ct ; 66% @ 26ct

BTW, I checked the URA site (updates on mid-mth) and there were no new sale of 8Raja units…

Sell @ $0.25

The calculated Shares Buy Back Max Buy Price = $0.2478 or 44% @ 24.5ct ; 56% @ 25ct

For today, there were no giveaway in the Mkt open Buy & Sell Q… Other than that, the script follows closely to that of yesterday,

• A slow start
• A huge Sell Q (much bigger than yesterday) coupled with a low Buy Q
  • Sellers finally "motivated" to sell to Buy Q
  • Buy Q got topped up.. but in smaller Qty than yesterday
  • Bigger sellers appeared, perhaps "motivated" by the long weekends – perhaps fears of Shares Buy Back going MIA (not unfounded based on past track record)
• Nibbling @ 25ct Buy Q started after lunch followed by a huge buy in the late afternoon

What I did was to put some in 25ct & 25.5ct Sell Q, despite the huge Q (close to 900 lots). The 25ct ones were done.

We're now cautiously hopeful that they may continue to do the Shares Buy Back, perhaps till slightly below NAV = 27.61ct (their highest was 28ct, above NAV).

Current gameplan is to continue selling with every 0.5ct bid up, but, now in smaller Qty. Perhaps an Inverse Pyramid approach ie. Bigger Qty at higher prices.

After mkt close, SGX Annc on Shares Buy Back,

• 2,294,000 @ $0.2473 (slightly below calculated $0.2378)
• Vol = 2,947,000 ; Range 24.5ct to 25ct

For the next trading day on 21-Apr (Mon),

• Max Buy Price = 25.31ct
• 62% @ 25.5ct ; 38% @ 25ct

 

Sell @ $0.2441

The highlights of today… 😀

We were spot on when we guessed that Shares Buy Back is in action today..The first clue was the Buy Q @ $0.24 and Sell Q @ $0.245 when mkt opened. The ratio was exactly the same as what I'd calculated for Max Buy Back Price = $0.2436 ie. 72% @ $0.245 ; 28% @ $0.24 ie. The probability was very high that their Broker must have calculated the Qty to put in the Buy Q based on the Sell Q Qty…

The problem is… someone must sell to them @ $0.24 before they can buy some from the Sell Q @ $0.245..

To further test our hypothesis, I added more Qty to the Sell Q @ $0.245 to see if the Buy Q @ $0.24 rises in tandem.. But, the growing Sell Q must have motivated others to sell to the Buy Q instead… True enough, someone immediately did a buy @ $0.245 + Buy Q Qty got bigger… Interesting… I sold some to Buy Q to see if more Buys will be done @ $0.245…

At this point, the strategy must have changed. No more Buys @ $0.245 as the Sell Q grew bigger and more sellers got motivated to sell to Buyer @ $0.24. Here, we also guesstimated that the Broker will likely continue to accumulate at $0.24 and only do a huge Buy @ $0.245 in the late afternoon.

Bingo! We guessed correctly!

At this point, our guesstimates become more complicated as we were adding in the possibility of Buys @ $0.25 (a 3rd variable). Based on our dynamic formula in spreadsheet, the Broker could have bought ~100 to 250 lots @ $0.25 at different point in time (when different Qty were done at 24  & 24.5) and perhaps try to drive up the Closeing Price. But, that did not happen…

After mkt closed, Shares Buy Back was announced. Some data,

• 1,800,000 @ $0.24326 (vs Calculated Price = $$0.2436)
• Vol = 2,215,000 ; Range 24 to 24.5ct

For tomorrow, calculated Max Buy Price = $0.2478 or 44% @ $0.245 ; 56% @ $0.25

BUT, note that their Shares Buy Back activities had been very inconsistent,

• 8mths since last one on 7-Aug-13
• Mostly 1-day hit-and-run
• Longest 4 consecutive days, twice

This time round, they did their Shares Buy Back 2 days ago and then MIA for one day before resuming today..

This unpredictability helped me to decide to sell + of course their weakening profitability… With today's selling, my remaining ones are the "pioneer" ones bought at 17.1 to 18.4ct..  I'll likely continue to sell on the way up (if that happens) as I'm not too optimistic based on the following reasons,

• Profitability will remain weakened as it's due to rising costs (Admin + Selling)
• Property mkt is softening. Matter of time before they write down 8Raja as it's not moving => Likely Losses (but accounting losses ie. no actual cash)

The only reason that's holding me back from dumping all is their strong Balance Sheet. Cash = 15.12ct and if they do manage to sell any 8Raja units (even at a loss), it'll add on more cash (6.29ct / share)…

Other thoughts that I have are,

• Capital Reduction or Special Div. But, very unlikely unless they give up the Property Biz (which needs lots of cash to buy land and develop it).
• General Offer – Mr Chou's stake just crossed 60% after the last Shares Buy Back. IMO, too low a % for a successful G.O. unless it's offered at a huge premium. Shares Buy Back is indirectly helping to increase his % but for the 1st year, they did only 3.186% (out of 10% max). For the 2nd year, only 0.356% (mandate expires on 22-Aug-14). So, likely need another 3 years before Mr Chou crosses 70%.. just in time for his 80th birthday..