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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ »  BLUE Subdivision

BLUE Subdivision

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21 BLUE Subdivision - Page 2 Empty BLUE Stated capital reduction Wed Jan 25, 2012 4:26 pm

Leo


Manager - Equity Analytics
Manager - Equity Analytics
Can an expert tell me what kind of an impact will there be on reducing the stated capital of BLUE.

http://cse.lk/cmt/upload_cse_announcements/2081327486865_.pdf

22 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 4:38 pm

Genting


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Im no expert,
But usual way is that share price will fall for this kind of news.
BUT
1:14 subdivision!!
if this happened during 2010, the the price would have shoot to the moon!!

23 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 8:38 pm

FIRE123


Manager - Equity Analytics
Manager - Equity Analytics
should go up

24 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 8:41 pm

2011_NewComer


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@FIRE123 wrote:should go up

What is the reason to go up? Is it a good thing or a bad thing? Question

25 BLUE Subdivision - Page 2 Empty BLUE DIAMOND??????? Wed Jan 25, 2012 8:53 pm

dcwal


Manager - Equity Analytics
Manager - Equity Analytics
WHAT WILL HAPPEN TO BLUE SHARE AFTER SUB-DIVIDENT???
TOMMOROW IT WILL GO UP OR DOWN???

26 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 8:55 pm

bakapandithaya

bakapandithaya
Vice President - Equity Analytics
Vice President - Equity Analytics
@dcwal wrote:WHAT WILL HAPPEN TO BLUE SHARE AFTER SUB-DIVIDENT???
TOMMOROW IT WILL GO UP OR DOWN???

Tht shuld b sub division bro, nt sub divident

27 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 8:58 pm

dcwal


Manager - Equity Analytics
Manager - Equity Analytics
@bakapandithaya wrote:
@dcwal wrote:WHAT WILL HAPPEN TO BLUE SHARE AFTER SUB-DIVIDENT???
TOMMOROW IT WILL GO UP OR DOWN???

Tht shuld b sub division bro, nt sub divident


sorry....mistake....

28 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 9:16 pm

sanjaya351


Manager - Equity Analytics
Manager - Equity Analytics
some of the manipulators will for sure take this share up siting this sub division as a reason - some say it may hit high of 15 -20 ...

29 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 9:53 pm

Nishan123


Stock Analytic
Stock Analytic
Please, can anyone explain me What is the mean of Reduction of Stated Capital?

30 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 10:02 pm

Light of Hope


Vice President - Equity Analytics
Vice President - Equity Analytics
opps,



Last edited by Light of Hope on Wed Jan 25, 2012 10:19 pm; edited 1 time in total

31 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Wed Jan 25, 2012 10:18 pm

Light of Hope


Vice President - Equity Analytics
Vice President - Equity Analytics
I think most of the unexperienced retailors have left the market now. The left once. don't buy shares on news. maybe that's why the market doesn't respond to news like those days. maybe this want have any impact on the price. but who knows.

32 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 12:27 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
What actually this implies is; they wanted to reduce their accumulated losses in books.. for that they're reducing down th 1Bn Stated capital to 208 Mil..
This is normal for any company that cant come up with profit making plan.. Wink

Accordingly existing 103 Mil shares will be increased to 1446 Mil..

Ok this is a suisidal thinking in management line.. This means a share can be bought aroound .40-.60 I think.. but whats the need?

If this news runs the share price, it means more and more dump money is getting sucked in..

33 BLUE Subdivision - Page 2 Empty Blue price should come to 0.10L Thu Jan 26, 2012 4:49 am

market bull

market bull
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Theoretically Blue price come to 0.10L after subdivision & stated capital reduction

7.90/14/5.8 Times =0.10

1064/208=5.8


If i am wrong,please correct me.

34 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 7:39 am

raa


Manager - Equity Analytics
Manager - Equity Analytics
I hope an expert can correct me if i'm wrong, but as i understand it;

A company's stated capital is part is considered as part of its equity component. By reducing its stated capital, it writes off its carry forward losses from its profit and loss statement.

Why would a company do this? Because its carry forward losses are so large that it would take many many years for its profits to recover its losses.
Example:
Year 1: Company makes 100m loss
Year 2: Company makes 50m loss
Year 3: Company makes 25m loss
Year 4: Company makes 5m profit
Year 5 and every year after, company makes steady 5m profit.

Its carry forward loss by Year 3 is 175m. If it has to recover the loss, at a profit of 5m a year it will take 35 years (175/5). What it can opt to do is reduce its stated capital by the carry forward loss in Year 3 by 175m. Now the company will have zero carry forward losses and can focus on increasing its retained earnings reserve by 5m a year. It can also look to declaring a dividend. SEMB reduced its capital a month or two ago if I remember.

This is generally regarded as a negative thing but its effect on the shareholder is minimal. To compensate, Blue is subdividing the shares to give shareholders the opportunity to make capital gains i think. I don't really understand why else they are subdividing.

35 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 7:56 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
How does sub-dividing gives capital gains?

36 BLUE Subdivision - Page 2 Empty How does sub-dividing gives capital gains? Thu Jan 26, 2012 7:57 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
How does sub-dividing gives capital gains? (BLUE)

37 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 8:17 am

hairai


Senior Equity Analytic
Senior Equity Analytic
There will not be any capital gain in subdeviding the shares. Sub division does not affect the value of the share.

Further, Capital reduction means transferring the accumulated loss to the Stated Capital Ac. Then accumulated loss will be zero. But then again no effect to the share value.

38 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 8:33 am

wsaman

wsaman
Manager - Equity Analytics
Manager - Equity Analytics
Now BLUE N price is arund 7.60. After subdivision actual value should be (7.60/14) Rs 0.54. For X (3.6/14) Rs. 0.25. Do you think the share prices will stay as 50 cents and 25 cents. I hope the subdivion surely will give a profit to share holders.

39 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 10:01 am

NewInvestor

NewInvestor
Manager - Equity Analytics
Manager - Equity Analytics
When this will happen??

40 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 10:07 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@ccsentha wrote:How does sub-dividing gives capital gains?

There are no capital gain.. only it will wipe off the accumulated losses the company had for last few year.. So if they make profits in coming years their balance sheets and income statements can look good for potential investors..

But then again too much of shares.. imagine over 1B..

41 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 10:18 am

raa


Manager - Equity Analytics
Manager - Equity Analytics
Sorry, when i said capital gains.... i meant by splitting the share and "taking" (manipulating) the stock up to give existing shareholders capital gains. I don't understand why they would want to increase the no. of shares to over a billion otherwise! How much a dividend can you announce when you have 1bn shares...

IF someone else has another explanation, I'd really like to hear it.

HaPan


Equity Analytic
Equity Analytic
Dunno why the hell SLIC bought BLUE above 10 LKR...

https://i.servimg.com/u/f47/17/17/56/18/blue10.jpg]https://i.servimg.com/u/f47/17/17/56/18/blue10.jpg

43 BLUE Subdivision - Page 2 Empty Blue subdivision of shares 1:14 Thu Jan 26, 2012 10:32 am

vacna

vacna
Equity Analytic
Equity Analytic
Hi
Can anyone explain what will happen to BLUE with this announcement

44 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 10:34 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@raa wrote:Sorry, when i said capital gains.... i meant by splitting the share and "taking" (manipulating) the stock up to give existing shareholders capital gains. I don't understand why they would want to increase the no. of shares to over a billion otherwise! How much a dividend can you announce when you have 1bn shares...

IF someone else has another explanation, I'd really like to hear it.

There wont be any dividends in near future in my opinion.. I think the management want to tun the company to profitability at least for the sake of potential new investors Wink

Some new magic...

45 BLUE Subdivision - Page 2 Empty Re: BLUE Subdivision Thu Jan 26, 2012 10:34 am

Roboticfx

Roboticfx
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
There is another post regarding this topic. Please refer to the smallvile's comment on it. Very Happy

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