FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post


ADVERTISE
Poll

EXCHANGE RATE PREDICTION: 2022

 
 
 
 

View results

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» HAYLEYS PLC (HAYL.N0000)
by EPS Yesterday at 11:55 pm

» NO FURTHER INCREASE IN TAXES-PRES. RANIL WICKRAMASINGHE
by ADVENTUS Yesterday at 3:48 pm

» AAIC 100 = SCAP 16
by Equity Win Yesterday at 2:11 pm

» CARGO BOAT DEVELOPMENT COMPANY PLC (CABO.N0000)
by Dasun Maduwantha Yesterday at 12:10 pm

» Nestle‚ declares highest ever dividend
by Shiranli Yesterday at 11:24 am

» PRIME LANDS RESIDENCIES PLC (PLR.N0000)
by Anushka Perz Yesterday at 11:15 am

» Buy lofc tomorrow - Maharaja
by Maharaja Yesterday at 9:47 am

» MULTI FINANCE PLC (MFL.N0000)
by Eleven Mon Aug 08, 2022 9:28 pm

» AGSTAR PLC (AGST.N0000)
by Thushara Ayya Mon Aug 08, 2022 4:18 pm

» ACL; MELS; HHL; BIL; LWL- STOCKS TO WATCH
by ADVENTUS Mon Aug 08, 2022 1:43 pm

» LIOC ....Get in soon
by samaritan Mon Aug 08, 2022 11:49 am

» Sinopec likely to enter Lankan fuel market
by samaritan Mon Aug 08, 2022 9:41 am

» RW - Rescue Warrior of Sri Lanka's Economy
by reyaz Mon Aug 08, 2022 8:17 am

» Should Central bank increase Interest rates?
by reyaz Mon Aug 08, 2022 7:52 am

» LPRT and CHOT old and profitable businesses, yet severely undervalued
by sheildskye Sun Aug 07, 2022 12:05 pm

» L G I L - Maharaja special
by Chula Sat Aug 06, 2022 6:24 pm

» Day Trader may find a stock attractive if it moves a lot during the day. Stock market for beginners and day traders
by Asoka Samarakone Sat Aug 06, 2022 11:54 am

» Foundation laid for Nestlé Lanka’s Rs.5bn factory expansion
by nilantha suranga Sat Aug 06, 2022 1:57 am

» HAYLEYS PLC (HAYL.N0000)
by cseboss Fri Aug 05, 2022 7:21 pm

» I can't understad your behaviour
by D.G.Dayaratne Fri Aug 05, 2022 6:56 pm

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Conglomerate price e.g. VONE

Conglomerate price e.g. VONE

+4
WildBear
soileconomy
lamaya
hasi17
8 posters

Go down  Message [Page 1 of 1]

1Conglomerate price e.g. VONE Empty Conglomerate price e.g. VONE Sun Dec 18, 2011 5:17 pm

hasi17


Equity Analytic
Equity Analytic

VONE price multiple is nearly twice as the subsidiaries it owns. Unlike other conglomerates it's much clear as it's just a container.
Other diversifieds must be much much worse.

Shouldn't the conglomerate priced lower than the parts?
Why would somebody buy plate, fork and spoon altogether at a higher price when they can buy each separate item at half the price? Shouldn't it be the other way? That is bundle should be cheaper than the separate items? But in this case the conglomerate price is much higher.

2Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 6:59 pm

lamaya


Equity Analytic
Equity Analytic

very true.....!!!!

3Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 7:15 pm

soileconomy

soileconomy
Vice President - Equity Analytics
Vice President - Equity Analytics

One reason is big people are holding it.Free float may less.
Connected to controlling interest.
Another one is ,it is diversified.It does not need to depend on one business.
Sometimes some sectors do not do properly.
That is why as a sector diversified business entities have a fairly higher PE ratio compared to average PE ratio.
They may take over some companies .Then PEG will improve.

4Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 7:27 pm

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Diversified companies will further diversify and end up with a higher shareholder value. This year VONE acquired Orit Garments, Delmage group and and a portion of Haylies. SHL bought Asian Alliance and a stake of NDB.

5Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 7:40 pm

hasi17


Equity Analytic
Equity Analytic

I think my example is too simple for the context.

The fact is even after acquiring more and more companies or becoming fat doesn't make its price multiple higher. It should remain the same.
When you buy individual companies you can select the ones you want and skip most of the junk, and you get the benefits directly as dividends, rights, reserves, so have full control of everything. If you look at the diversified most of the time only one or two segments perform well and other eat the profits from the profitable parts.
When you buy a conglomerate there's 'operational costs, administrative costs' of the conglomerate on top of the earnings those individual companies make. Also you don't have direct control of any part benefits. You're going through an extra layer of inefficiency.
So I think this inefficiency should have a lower value than the individual parts.
As far as I know PE ratios are low in other countries. I think in Sri Lanka the reason diversified were bought at a higher price was that those days in the war times everybody liked the big companies which everybody thought would be immune to the unstable conditions. But now that the war is no more, that risky is not there.

6Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 7:54 pm

soileconomy

soileconomy
Vice President - Equity Analytics
Vice President - Equity Analytics

No of shares matters a lot (liquidity )
Normally conglomerates have more no of shares.
liquidity normally attracts more foreigners in a market like SL.
Steady of the business itself is a + point for investing rather than fluctuation of
profits.
If one person invested in SUGA (Pelwatte ) his full portfolio instead of DIST (Distillaries ) what would have been his fate?

7Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 8:14 pm

Rapaport

Rapaport
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

VONE also contains some parts which are not listed and currently not making an impact to its profits. It is making a hotel, invested in Hayleys and an apparel factory if im not mistaken.

It maybe priced higher due to it potential in the future as a holding company.

Cheers!

8Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 9:40 pm

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Rapaport wrote:VONE also contains some parts which are not listed and currently not making an impact to its profits. It is making a hotel, invested in Hayleys and an apparel factory if im not mistaken.

It maybe priced higher due to it potential in the future as a holding company.

Cheers!

You got a reason.
Good point.

9Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 10:17 pm

Rajaraam


Vice President - Equity Analytics
Vice President - Equity Analytics

Rapaport wrote:VONE also contains some parts which are not listed and currently not making an impact to its profits. It is making a hotel, invested in Hayleys and an apparel factory if im not mistaken.

It maybe priced higher due to it potential in the future as a holding company.

Cheers!
Corect. We can see price appriciation of Carson,JKH ,SPENCE Hayleys etc. Within 3-4 years one can expect a good Capital gain on investment made for VONE.

10Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Sun Dec 18, 2011 11:01 pm

hasi17


Equity Analytic
Equity Analytic

Rapaport wrote:VONE also contains some parts which are not listed and currently not making an impact to its profits. It is making a hotel, invested in Hayleys and an apparel factory if im not mistaken.

It maybe priced higher due to it potential in the future as a holding company.

Cheers!

Today I checked the leisure sector contribution of one company to the bottom line. It was 0.1% although they promoted their hotels and the leisure sector. Smile
So beware of when people say they *will* do great in hotels or some different business from the core business. They are always optimistic. But check the real contribution to the final numbers. Most probably its insignificant.
If you take VONE container the contents are very clear. Because there isn't much in it. Only big contribution other than the listed companies is the Delmege. But if it's not listed how do you value it. I guess it should be its fair value as it cannot be valued at any kind of market price.
The thing is in the future all these companies would do well, there's nothing wrong with any of the companies. It's the current price which is questionable.

11Conglomerate price e.g. VONE Empty Re: Conglomerate price e.g. VONE Mon Dec 19, 2011 2:39 am

CSE.SAS

CSE.SAS
Global Moderator

Rapaport wrote:VONE also contains some parts which are not listed and currently not making an impact to its profits. It is making a hotel, invested in Hayleys and an apparel factory if im not mistaken.

It maybe priced higher due to it potential in the future as a holding company.

Cheers!

Very good point Rapaport...

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum