Starburst - has the turnaround been factored in?

USUALLY, we try to feature warrants issued by companies whose shares have been battered to new lows so that interested parties can have some assurance of upside. The chances of making money are then increased if the warrants have plenty of time on their side; after all, what more could anyone ask for rock-bottom prices with years ahead to benefit from a recovery?

Today's feature however, is on a stock which has almost doubled since the start of the year. It is the warrant issued by Starburst Holdings, which describes itself as "a prominent engineering group specialising in the design and engineering of modern firearms-training facilities''. Its shares started the year at around S$0.20 but although they now sell for S$0.405, the associated warrants certainly warrant a look.

Starburst's warrant carries an exercise price of S$0.25 so they are "in-the-money'' by S$0.155. They sell for exactly that amount - S$0.155 - so the conversion premium is zero. However, gearing is decent at 2.6 times and there's sufficient time left, with expiry only in June 2021. For interest's sake, Bloomberg gives the days to expiry as 1,410.