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发表于 2009-5-8 12:25 AM
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本帖最后由 izan 于 2009-5-8 01:26 编辑
Dear All,
Citigroup has been on the move before the stress test result was
officially announced. However, we note that investors are dumping the
share in exchange for profits. We noticed that comments are being
circulated that Citigroup will be badly hit due to the conversion of
preferred stocks. In order to have a better comprehension of the
matter, investors should first understand that the action taken by the
bank for the conversion is to strengthen its financial capability.
Based on a maximum conversion, the US government would own 34% of
existing common and existing shareholders would own 24% of the
outstanding common shares. In other words, existing common
shareholders will have their holdings slashed by 76%. However, the
price of the share is expected to rise in tandem. But we believe the
price of Citi will move up prior to the date of conversion i.e. to as
high as USD7 to as low as USD3.25 (please take note that this is our
own observation based on financial analysis covering as well the
sentiment of investors and should not be used as a single investment
judgement).
This conversion would positively increase Citi's Tier 1 Common from
USD22 billion to USD86 billion, assuming the government fully exercise
its preferred. Perhaps, one who has been long on investment should be
able to calculate the rise of Tier1 value vis-a-vis share price.
Therefore, we predict very volatile trading activities in the next few
weeks prior to an official announcement by the bank on the conversion
date. For those who wants to exit if the price hits USD7, then well
and good, but there will always be those who will continue with
Citigroup as the management write a new page on its newly founded
financial vim, vigour and vitality.
Finally, we would want to advise to all readers that the US government
has little interest to actively participate in the day to day running
of any banks in the country. They are merely interested to ensure
financial transparency, strength and stability of all the banks so as
to continue propelling the country's economy. It is also important to
note that it is better for the bank to operate soundly should lesser
preferred stocks are issued out as the dividend continues to be a
straining toll particularly in such operating conditions. Therefore,
as the country continues its journey out from the woods, we are
confident that Citigroup will rise to the occassion.
Our humble thoughts.
http://finance.google.com/group/ ... ad/8c357e6b6d1de64f
Looks like Citi's financials will be greatly enhanced from 22 to 86
billion or a 300% increase. The share may be USD13 after the
conversion since the capital remains the same i.e. 5.5 billion shares.
Looks like the price will shoot up high in between |
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发表于 2009-5-7 09:19 PM
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