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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » WAPO's cost after rights

WAPO's cost after rights

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1WAPO's cost after rights Empty WAPO's cost after rights Wed Mar 23, 2011 12:53 pm

bmi


Senior Equity Analytic
Senior Equity Analytic
Could any one tell me wapo's cost after rights?

2WAPO's cost after rights Empty WAPO Wed Mar 23, 2011 12:57 pm

upendra


Equity Analytic
Equity Analytic
Calculation is complecated.But for sure this will go up beyond Rs 1000/= this week

3WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 1:55 pm

Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@bmi wrote:Could any one tell me wapo's cost after rights?

Price before right = 800

Proceed from right for 2 existing shares = 75*20

Value of a equity share after right = (800*2+75*20)/77= Rs 40.

Don't get your hands burnt.


Any other view?

4WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 2:14 pm

cse.alpha


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
WAPO share though was already overvalued even before announcement of Rights at Rs 800 - and then it went as high as Rs 10,000 before going ex-Rights.

Fair value is probably even below Rs 40 - closer to Rs 20-25 possibly.

5WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 4:18 pm

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Academic wrote:
@bmi wrote:Could any one tell me wapo's cost after rights?

Price before right = 800

Proceed from right for 2 existing shares = 75*20

Value of a equity share after right = (800*2+75*20)/77= Rs 40.

Don't get your hands burnt.


Any other view?

Actually if you take that Rs 800 as the previous value and think WAPO can increase their earnings proportanate to the cash they received ( If the received money does not help business whats the point. OFC it has to come in to the equation ) you can make a true fair value rather than a fake one like you have posted. ( You did not took in to account the cash company received)

But I do not have have any WAPO and although I already did the calculation I'm going to avoid posting it as don't want to displease the crowd here and get negative rep again !!

Ps:- Its quite a high value than Rs 40 because the counter was really over prices because of its liquidity issue!

6WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 9:20 pm

Academic


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Rajitha,

Following are my counter arguments.

@Rajitha wrote: Actually if you take that Rs 800 as the previous value and think WAPO can increase their earnings proportanate to the cash they received ( If the received money does not help business whats the point. OFC it has to come in to the equation ) you can make a true fair value rather than a fake one like you have posted.

It is accepted that any economic value addition (EVA) that a company is expected to create on capital should be added to enterprise value. That is why we expect a profitable company to trade at 1< multiples to book value.

However, Rajitha, this is true for a company which is generating profit. If you see last quarterly reports of WAPO EPS is a LOSS of Rs 0.11.

@Rajitha wrote: ( You did not took in to account the cash company received)
I have taken the proceed of right issue in the equation. That is 20*75. Hope you can locate it.

@Rajitha wrote: Ps:- Its quite a high value than Rs 40 because the counter was really over prices because of its liquidity issue!

As the right is 75 for every 2 shares, liquidity position will somewhat improve.

In addition to that Carson sold the rights to Ceylon Guardian Investment Trust at Rs 10.30 (follow the link below).

http://www.cse.lk/cmt/uploadAnnounceFiles/6381298979017_612.pdf

That is, the cost of the new shares to the buyer is 10.3+20= Rs 30.3 (excluding the transaction cost).

This is closer to cse.alpha’s figure in the above post.

Any other different view?

7WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 10:17 pm

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Hoi what is the point Only thing that comes out of it is me getting negative rep as I said before! You can see for it your self Very Happy

Best thing to do here is just go with the flow and say what ever makes the people happy true or false than get in to an argument or try to point out a different view!
Juts FYI I have never ever had any WAPO or any of its right! So why bother just to get a bad name out of it! Better to keep quite and just read what others post!

8WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 10:26 pm

gann

gann
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Rajitha wrote: Hoi what is the point Only thing that comes out of it is me getting negative rep as I said before! You can see for it your self Very Happy

Best thing to do here is just go with the flow and say what ever makes the people happy true or false than get in to an argument or try to point out a different view!
Juts FYI I have never ever had any WAPO or any of its right! So why bother just to get a bad name out of it! Better to keep quite and just read what others post!

I am sure you will not get negative reps for sharing your view. Please share your views. What I cant understand is why would people pay all kinds of prices for this stock. Could anyone explain please.



Last edited by gann on Wed Mar 23, 2011 10:38 pm; edited 1 time in total

9WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 10:36 pm

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Rajitha wrote: Hoi what is the point Only thing that comes out of it is me getting negative rep as I said before! You can see for it your self Very Happy

Best thing to do here is just go with the flow and say what ever makes the people happy true or false than get in to an argument or try to point out a different view!
Juts FYI I have never ever had any WAPO or any of its right! So why bother just to get a bad name out of it! Better to keep quite and just read what others post!
Hey Rajitha, Do not get discourage by looking at your negative rep. Though I disagree with your comment regarding WAPO, your contribution to the forum is very usefull, specially in the planation sector. Please share with your views. Smile

Go ahead man. bounce

10WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 10:53 pm

mark

mark
Expert
Expert
@Rajitha wrote: Hoi what is the point Only thing that comes out of it is me getting negative rep as I said before! You can see for it your self Very Happy

Best thing to do here is just go with the flow and say what ever makes the people happy true or false than get in to an argument or try to point out a different view!
Juts FYI I have never ever had any WAPO or any of its right! So why bother just to get a bad name out of it! Better to keep quite and just read what others post!

don't consider negative reps,we will make it positive..........i know that you don't have single WAPO share..........we just need to argue with facts.........
this forum need you................"jaya wewa"........... Smile Smile Smile Smile Smile

11WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 11:06 pm

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@gann wrote:
I am sure you will not get negative reps for sharing your view. Please share your views. What I cant understand is why would people pay all kinds of prices for this stock. Could anyone explain please.

First off I never had any WAPO or have any now but I can easily see why people paid all sorts of cash for this!
Imagine a person who paid even Rs 10000 per share to buy 100 shares at its peak. That person would have received 3750 rights!
So he spend - Rs 1 000 000 and like next day he get 3750 rights and he could have sold those rights easily at almost Rs 1000 per 1 right! ( it went up till rs 1500). Thats rs 3 750 000.
So even if he don't sell his original share that bought at absurd price he would have made 275% profit almost few days time. Many people actually knew getting such huge profits were possible because of the amount of rights and the low right converting price !
OFC many Pigs who bought those shares at the end got slaughtered but thats not the fault of person trying to explain this or people who sold. Just the greedy idiots who can't do any background check in to a share!

To answer acadamic
The share had earnings in previous quarters although it had a small loss last quarter but I can't again to go check figures( go check past statements at least they had as I saw quarter before last one) .
People paid Rs 800 as you posted before for a share that had Net asset value of Rs 21!
After the right issue a share has Net asset value per share is about Rs 20-21
So if you consider the company can use the cash they received properly like they have before they should be able to produce almost same sort of results meaning a current share should be trading around Rs 750 or so!
But OFC the only reason WAPO was even trading at rs 800 before the right issue is because of its illiquidity! So as now too many shares are in the market the share price will be way lower meaning the values we saw just about now! But I see no reason why it should be trading around rs 20-30 as some people have pointed out!

Most people are just upset as they did not make any cash from WAPO and also they think it one of the main culprits for the market downturn! ( Its not WAPO but the whole CARS group imo mainly CARS+ BUKI) So they let their judgment get clouded from this!

12WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 11:20 pm

gann

gann
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Gamblers got paid today lol! lol! Good for them.

13WAPO's cost after rights Empty Re: WAPO's cost after rights Wed Mar 23, 2011 11:53 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Rajitha wrote:
@gann wrote:
I am sure you will not get negative reps for sharing your view. Please share your views. What I cant understand is why would people pay all kinds of prices for this stock. Could anyone explain please.

First off I never had any WAPO or have any now but I can easily see why people paid all sorts of cash for this!
Imagine a person who paid even Rs 10000 per share to buy 100 shares at its peak. That person would have received 3750 rights!
So he spend - Rs 1 000 000 and like next day he get 3750 rights and he could have sold those rights easily at almost Rs 1000 per 1 right! ( it went up till rs 1500). Thats rs 3 750 000.
So even if he don't sell his original share that bought at absurd price he would have made 275% profit almost few days time. Many people actually knew getting such huge profits were possible because of the amount of rights and the low right converting price !
OFC many Pigs who bought those shares at the end got slaughtered but thats not the fault of person trying to explain this or people who sold. Just the greedy idiots who can't do any background check in to a share!

To answer acadamic
The share had earnings in previous quarters although it had a small loss last quarter but I can't again to go check figures( go check past statements at least they had as I saw quarter before last one) .
People paid Rs 800 as you posted before for a share that had Net asset value of Rs 21!
After the right issue a share has Net asset value per share is about Rs 20-21
So if you consider the company can use the cash they received properly like they have before they should be able to produce almost same sort of results meaning a current share should be trading around Rs 750 or so!
But OFC the only reason WAPO was even trading at rs 800 before the right issue is because of its illiquidity! So as now too many shares are in the market the share price will be way lower meaning the values we saw just about now! But I see no reason why it should be trading around rs 20-30 as some people have pointed out!

Most people are just upset as they did not make any cash from WAPO and also they think it one of the main culprits for the market downturn! ( Its not WAPO but the whole CARS group imo mainly CARS+ BUKI) So they let their judgment get clouded from this!

That's a valid and honest openion that we wont see everyday..

Rajitha, just forget about how others think about the openion you have, if its valid enuf and if you say it with the solid information, yes people might get hurt, but you're doing a favour to the comminuty by educating them on the dark side of something made as a glitter.. all that glitter are not GOLD Wink
Also if majortiy sees your point is really worth considering dont worry on negative reps Wink

This WAPO is really unpredictable and any1 who has not got any idea on this should stay away from it. It has made poupers to billioners and vice versa..

14WAPO's cost after rights Empty Re: WAPO's cost after rights Thu Mar 24, 2011 8:48 am

cse.alpha


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
WAPO had net book value of Rs 21 per share at 31.12.10 (based on 0.67 million shares)

WAPO's only assets at 31.12.10 were Rs 20 mn of cash - it had no investments, no land, no fixed assets, no intangibles, no employees even and no other businesses. Its only returns could be from deployment of cash - so it is an investment trust.

After 75 for 2 rights issue @ Rs 20 per share that raised Rs 503 million, WAPO's adjusted net book value per share would be around Rs 20 (now 25.83 mn shares in issue) - total net book value of around Rs 524 mn.

WAPO's assets after the rights issue are Rs 250 mn worth of Expo Lanka shares, and Rs 270 mn of cash.

Expo Lanka is going public soon, and we can optimistically expect the Rs 250 mn to be worth double, at say Rs 500 mn - that would still raise WAPO's adjusted net book value per share by only around Rs 10 to approximately Rs 30 per share.

Investors paying more than 8 times adjusted book value, for what is basically an investment trust where net asset value is better valuation method than PER or discounted free cash flows methods, seem to be very confident of management ability to deliver exceptional super normal returns on adjusted asset base of Rs775 mn (taking double of Expo Lanka initial investment value).

WAPO will do well, but will it do well enough to justify current prices of around Rs 250? Similar, but much larger investment trusts such as CINV and GUAR do not command such premiums to net asset value.

Look at WAPO interim statement for more details and confirmation of figures:

http://www.cse.lk/cmt/upload_report_file/612_1298894789656.pdf

Disclaimer : I have no material interest in WAPO, and this is published just as an attempt to broaden knowledge.

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