Stock Split? Bonus Share Issue? It's confusing and I don't understand.
$RCECAP (9296.MY)$ Sent in a 1:1 ratioRed sharesFor existing shareholders, to be executed on September 26, 2024. It's been confusing all the way.Stock split.Divide and splitRed sharesNow I understand the respective situations. I will try it.In layman's termsA simple explanation of the concept.
1. Stock Split
For example:
• Assume you have a cake worth 100 yuan and cut it into 4 pieces, each piece is worth 25 yuan.
• Splitting stocks is like cutting these 4 pieces of cake into 8 pieces, so the value of each piece changes from 25 yuan to 12.5 yuan. The total value of the cake is still 100 yuan, but the value of each piece is different.The price has become cheaper.while the number you ownhas increased..
Summary:
• Stock split is the process of dividing existing shares into more shares, with the price per share decreasing but the total value remaining the same. The purpose of a stock split is to make the shares cheaper and easier to buy.
2. Bonus Share Issue
For example:
• Assuming you have a $100 cake, which has been divided into 4 slices, with each slice costing $25.
• Red sharesJust like a companyGive you another piece of cake for freeThe value of this cake is also 25 yuan. Now you have a total of 5 cakesEach one is still 25 yuanButThe value of each piecePossibly will.Slightly decreasedbecause the total number of cakes has increased.
Summary:
• Red sharesIs the companyUsing profitsDistributed to shareholdersExtra free stocksYour stock quantity has increased, but the price per share usually decreases.The purpose of bonus shares is to reward shareholders.,At the same time, it does not affect the company's cash flow. (This is important)
For example:
• Assume you have a cake worth 100 yuan and cut it into 4 pieces, each piece is worth 25 yuan.
• Splitting stocks is like cutting these 4 pieces of cake into 8 pieces, so the value of each piece changes from 25 yuan to 12.5 yuan. The total value of the cake is still 100 yuan, but the value of each piece is different.The price has become cheaper.while the number you ownhas increased..
Summary:
• Stock split is the process of dividing existing shares into more shares, with the price per share decreasing but the total value remaining the same. The purpose of a stock split is to make the shares cheaper and easier to buy.
2. Bonus Share Issue
For example:
• Assuming you have a $100 cake, which has been divided into 4 slices, with each slice costing $25.
• Red sharesJust like a companyGive you another piece of cake for freeThe value of this cake is also 25 yuan. Now you have a total of 5 cakesEach one is still 25 yuanButThe value of each piecePossibly will.Slightly decreasedbecause the total number of cakes has increased.
Summary:
• Red sharesIs the companyUsing profitsDistributed to shareholdersExtra free stocksYour stock quantity has increased, but the price per share usually decreases.The purpose of bonus shares is to reward shareholders.,At the same time, it does not affect the company's cash flow. (This is important)
. The main difference
• Stock split.: Splitting existing stocks into more shares is aimed at making the stocks cheaper and easier to trade, but the company's total market value remains unchanged.
• Red sharesThe company is giving out more stocks for free as part of the profit distribution.Your stock quantity has increased as a part of the profit distribution, but the price per share usually adjusts.Your stock quantity has increased, but the price per share usually adjusts..
• Stock split.: Splitting existing stocks into more shares is aimed at making the stocks cheaper and easier to trade, but the company's total market value remains unchanged.
• Red sharesThe company is giving out more stocks for free as part of the profit distribution.Your stock quantity has increased as a part of the profit distribution, but the price per share usually adjusts.Your stock quantity has increased, but the price per share usually adjusts..
Personal opinion:
$RCECAP (9296.MY)$ The company has always been famous for high dividends, with a dividend rate of 0.9 and 1.05 per share, which is actually no different from bonus shares. The company has a simple business and no plans for external expansion. Therefore, the money earned is distributed to shareholders in the form of dividends, benefiting the big shareholders greatly. In October 2024, the prime minister will announce a salary increase rate for civil servants, starting from 13% to 15%, with senior civil servants reaching as high as 43%! This will bring huge development opportunities for the company. My analysis is that issuing bonus shares is a way for the company to reserve a large sum of cash loans for civil servants, thereby bringing higher growth to the stock price.
Stock price adjustment after bonus share issue:
After the 1:1 bonus share distribution, although the number of shares you hold has doubled, the total market value of the company remains unchanged. Therefore, the stock price will be adjusted proportionally. For example, if the stock price before the bonus issue was 3.28 yuan, then the stock price after the bonus issue will be adjusted to 1.64 yuan (i.e. 3.28 yuan divided by 2). Overall, although the price per share has decreased, the total value of the shares you hold remains the same because the number of shares held has increased. This adjustment is automatically carried out by the market mechanism to ensure the balance of shareholder rights.
After the 1:1 bonus share distribution, although the number of shares you hold has doubled, the total market value of the company remains unchanged. Therefore, the stock price will be adjusted proportionally. For example, if the stock price before the bonus issue was 3.28 yuan, then the stock price after the bonus issue will be adjusted to 1.64 yuan (i.e. 3.28 yuan divided by 2). Overall, although the price per share has decreased, the total value of the shares you hold remains the same because the number of shares held has increased. This adjustment is automatically carried out by the market mechanism to ensure the balance of shareholder rights.
Summary
Bullish on long-term growth potential. I will personally hold it for a long term 😄
I hope this simple explanation can help you better understand.I hope this simple explanation can help you better understand.I hope this simple explanation can help you better understand.Stock split.和Red sharesThe difference!
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