TOUCHWOOD capitalization of reserves

Chinwi wrote:I think it should be

19x2 = 38. 38/3 = 12.66.

and not 19*2=(38+8.75)/3=15.58

8.75 is already in the assets.

somehow, in normal circumstances post bonus trading prices give you some return.

TWOD we dont need to pay 8.75 we will be benifitted - if u buy 02 @ 19x2 38 u get 3 shares for 38 if it trades at 15 after the bonus - you get 15x 3 - 45 for your 38

Huge Financial Gain ..After the bonus issue some more news to follow benifiting share holders - it will be a Devident most of the brokers say

TWOD we don’t need to pay 8.75 we will be benefitted - if u buy 02 @ 19x2 38 u get 3 shares for 38 if it trades at 15 after the bonus - you get 15x 3 - 45 for your 38

Huge Financial Gain. After the bonus issue some more news to follow benefiting share holders - it will be

http://www.cse.lk/cmt/upload_cse_announcements/7051349148121_.pdf

But you have to pay Rs. 8.75 to get a share. So it's
Purchase price = 19x2= 38

Cost of additional share = 38 + 8.75 = 46.75

Average cost of a share = 46.75/3=15.58

Chinwi what do you mean by 8.75 is already in the assets?

Capitalization of reserves announced;
http://www.cse.lk/cmt/upload_cse_announcements/7051349148121_.pdf

This is like a bonus 1 share for 2 shares hold.. But the value may come down after the XC date..

(19*2)/3 = 12.66
So 13 is a fair value I see..

It's a good decission by the board if it is done in good faith, as TWOD price cannot be justified for the earnings and asset value.

PBV is less than 0.5X and PE is less than 3X @ Rs.19/-.

zen wrote:But you have to pay Rs. 8.75 to get a share. So it's
Purchase price = 19x2= 38

Cost of additional share = 38 + 8.75 = 46.75

Average cost of a share = 46.75/3=15.58

Chinwi what do you mean by 8.75 is already in the assets?

u don't have to pay any money, this is just like a bonus, if u have 2 shares u will get 1 share free. Its not necessarily price should come down after capitalization of reserves, but its depend on the Mkt. situation. This is like a dividend with no tax reduction.

You do not have to pay 8.75 to get a share, Company fully pays for it using its reserves. WHat chinwi says it the total value of assets remain the same.

But the number of shares will increase and the price value per share will be less after capitaliation.

zen wrote:But you have to pay Rs. 8.75 to get a share. So it's
Purchase price = 19x2= 38

Cost of additional share = 38 + 8.75 = 46.75

Average cost of a share = 46.75/3=15.58

Chinwi what do you mean by 8.75 is already in the assets?

Got it. Thanks Roshanlav and slstock. I bought this at 21.10 yesterday. I'm going to keep it till everything is over to get a first hand experience.

smallville wrote:Capitalization of reserves announced;
http://www.cse.lk/cmt/upload_cse_announcements/7051349148121_.pdf

This is like a bonus 1 share for 2 shares hold.. But the value may come down after the XR date..

[8.75+(19*2)]/3 = 15.85
So 16 is a fair value I see..

Your calculation is wrong. You need not to pay Rs 8.75 to get the additional share.

Please refer http://forum.srilankaequity.com/t23373-twod-post-capitalization-of-reserves-share-price#140081

This offer is encouraging. I’ve decided to go for it at 19.10 due to below reasons.

1. NAV of TWOD is around 46 and the share is still trading less than half of it. So, in terms of NAV, the share price is massively undervalued. You are not buying an overvalued share.
2. The court issue is more favorable to the company. I don’t have any legal knowledge to justify but many are saying the case is not valid anymore.
3. Historically, TWOD gives you more trading opportunities during next hearing dates. The next hearing date is 6th November and a possibility for appreciating the share further is higher than going south.
4. Overall market sentiment is more bullish than bearish.
5. The bonus issue is a cover for any uncertain negative shake for the share price.
6. It is more rational to assume the share price to go to 30 from 19 than back to 12 or 13 before the bonus.

Monster wrote:

smallville wrote:Capitalization of reserves announced;
http://www.cse.lk/cmt/upload_cse_announcements/7051349148121_.pdf

This is like a bonus 1 share for 2 shares hold.. But the value may come down after the XR date..

[8.75+(19*2)]/3 = 15.85
So 16 is a fair value I see..

Your calculation is wrong. You need not to pay Rs 8.75 to get the additional share.

Please refer http://forum.srilankaequity.com/t23373-twod-post-capitalization-of-reserves-share-price#140081

Yes corrected.. I forgot that we dont pay 8.75.

Jana1 wrote:Technical is only applicable for shares which cannot be controlled by single investor/ couple of them. If that is not the case then he/ they can simply drag down the price to show the movement against the technical. Technical very rarely works man, most f them are only applicable for high cap mkts...

kasun333 wrote:smallville whats technical says now is it going below 15 or pass 20

Draggin down the price to be done with severe attention or the manipulators could be the bait..

Technicals work,, at least to a 70% degree and most of the traders even dont have that kinda success rate now a days LOL.

Technicals showed a massive distribution and it showed the news is coming while we've not paid attention..

I give value to the comments by Hareisha cuz he has pointed out that a company based on biological assets cannot be valued as we normally do.. These trees take time to grow and to mature to sell so its a game with the time, if the trees are not successful, everything will be over..

On another thread I saw that Chinwi mentioned he managed to plant a better resulted crop for a lesser price than TWOD. So its the knowledge and commitment of the person who is keen on his investment. TWOD wont do it for us free so there's a fee involved.

There are two sides... But if the fair value is coming around 13 after XR buying this at 19 now would not be bad or good even. Remember this still commands an asset value over 40 (as I can remember).

Overall I've not taken any positions on this yet.. I continue to monitor to benefit in a price action only..

morning 21.50. after few minutes going down sharply so how we have confidence this market. only Godahewa and few others know this market.

smallville wrote:Capitalization of reserves announced;
http://www.cse.lk/cmt/upload_cse_announcements/7051349148121_.pdf

This is like a bonus 1 share for 2 shares hold.. But the value may come down after the XR date..

(19*2)/3 = 12.66
So 13 is a fair value I see..

XC


.

sanju351 wrote:

kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 apitanam side ake ahema deyak pene nehane

hari nee ehanam TWOD walata atha nogaha innaa ...

sanju putha.oyage blue diamond tika wikkada????? :-)
patta padu athi needa???

anjelo wrote:

sanju351 wrote:

kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 apitanam side ake ahema deyak pene nehane

hari nee ehanam TWOD walata atha nogaha innaa ...

sanju putha.oyage blue diamond tika wikkada????? :-)
patta padu athi needa???

Naneee mama average karagena .60 Per share profit ekka sold out and again bought at 5.30 levels
I had few laks now have only 95000 Shares .

Am happy if u know how to trade effectivly you can gain from even bad market conditions ..

TWOD offer is encouraging. Hope it will pass in the general meeting. If market breaks 6000, TWOD may give a considerable shot term returns at this stage.

sanju351 wrote:

anjelo wrote:

sanju351 wrote:

kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 apitanam side ake ahema deyak pene nehane

hari nee ehanam TWOD walata atha nogaha innaa ...

sanju putha.oyage blue diamond tika wikkada????? :-)
patta padu athi needa???

Naneee mama average karagena .60 Per share profit ekka sold out and again bought at 5.30 levels
I had few laks now have only 95000 Shares .

Am happy if u know how to trade effectivly you can gain from even bad market conditions ..

Hahaahaa...people in this forum all know that u two are the same person. u always promote Blue Diamond. Do u still think all of us are fools? lol When a discussuion is goin on abt TWOD u bring up blue diamond.

RIO wrote:


XC


.

Thanks for pointing out.. corrected

Sana wrote:

sanju351 wrote:

anjelo wrote:

sanju351 wrote:

kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 apitanam side ake ahema deyak pene nehane

hari nee ehanam TWOD walata atha nogaha innaa ...

sanju putha.oyage blue diamond tika wikkada????? :-)
patta padu athi needa???

Naneee mama average karagena .60 Per share profit ekka sold out and again bought at 5.30 levels
I had few laks now have only 95000 Shares .

Am happy if u know how to trade effectivly you can gain from even bad market conditions ..

Hahaahaa...people in this forum all know that u two are the same person. u always promote Blue Diamond. Do u still think all of us are fools? lol When a discussuion is goin on abt TWOD u bring up blue diamond.

NA SANA MAMA WANA KENEK.SANJUGE PARANA NAMA SANJAYA WAGE EKAK.ADIM EEEKA WAHALA DAMMA.DAN WENA NAMAKIN ENAWA.PORA BLUE DIAMOND PAPPA.BORU ARA ARA PROMOTE KARANAWA.BANUTH HIRAWELA INNE SURE EKATAMA.5.30 TA ARAGENA NAMAI,MAMA HITHANNE PORA 6.50+ WALA WAGEE HIRAWELAA ATHI :-)

There may be a good chance to go to 28-30 level before XC. If they win the court case,share price will jump to minimum 50-60L. better to have some quantities but dont grab quantities that we cant hold as harsha mentioned.(unborn future)

NAPS 31/03/12:48.24
EPS:3.91 Current p/e nearly 5

NAPS will be more than 30 after bonus issue.But all depend on the market pattern in coming weeks

I think you have missed the important point in this announcement.

This capitalization is done using revaluation of lands only. They have not used the revaluation of living assets for this, which is under question in the law case. In that sense its good.

Mean time there is no real cash is involved in this capitalization. No cash in their reserves you can not expect a dividend from this company. If they give a such, it is like Sakvithi paying B from A. ( I think last year they paid 10 cents)

They show over billion in y/y revenue and only 20% of that figure is real cash.
Even that is obtained by selling plantation agreements to the investors and not from selling any real timber. 80% of the shown revenue is just revaluation of trees including 2-3 year old baby sandalwood plants.

Very important thing is that their cash outflow by admin & selling expenses is higher than their real cash inflow. That may be the reason for the accumulating losses in their income statements although they show positive EPS & profit at bottom line.

You can see this in 5 year summary. Page 7 of Annual report, Retained losses accumulated from 11 million in 2008 to 364 mil in 2012.
http://www.cse.lk/cmt/upload_report_file/631_1346902757838.pdf


Again, If you just glance the revenue line you may see their revenue has grown from 593 million in 2008 to a healthy fig of 1.19 billion in 2012.
That is actually the growth of trees and not transactions in cash as in other businesses.

We know any new plantation company has to face this phenomenon. For tea, palm oil or coconut maturing time is shorter and withing 4-5 years we can get in to a healthy position. When you deal with timber it is different.

I just pointed out some observations (repeated) and do not wanted to come into any argument here.
Somehow I hope they will maintain this journey until they get real cash by felling actual trees. ( after how many years?)
The time period between that and this is critical.

Good to see touchwood gives a bonus.. Their business model is always arguable in normal accounting standards as it deals with current value of future timber.
However, it is sad some senior members of this forum including some admins do not know the difference between bonus issue and right issue..

bonus = free
Rights = pay and buy

Small note for the newcomers:

This topic is about a bonus issue announced by TWOD.

It is not a share split. I think you know about share splits (also called sub division) because we saw many such splits during past two years.

For eg. Last year LOLC split 1 share in to 10. SFS sub divided 1 in to 20 shares.

Bonus issues like TWOD announced today were very popular under the previous Companies Act where a share always had a par value. ( 10 rupee, 1 rupee etc)

If a company issue bonus shares it has to transfer the corresponding amount from reserves to issued capital. As per the new act (2007-07) they have to pass the solvency test proving they have enough assets to pay for the lenders after the transfer.

For share splits, the directors are not bound with any test because no asset is transferred to anywhere. Even when you have no profits or reserves you can just split shares into any number 10, 20, 1000 or 100,000.
With the previous Act you could not do such thing with bonus issues. With the new act you can do it even with bonus ( theoretically) as there is no par value for a share.

TWOD is issuing 1 bonus share for 2 held by the shareholders and the dates are not yet announced. They have suggested to transfer 8.75 per share. This amount is as per the discretion of the directors. They can make it 1 cent, 1/- 10/- or even 100/- or 1000/-.
When previous act was in use they had to transfer the "par value". i.e. 10/- normally.

So all this mean good to buy TWOD at this level or is it not that worth? I'm referring to the bonus issue.

If they have accumulated losses, then twod cannot be that worth, isn't it?

ccsentha wrote:So all this mean good to buy TWOD at this level or is it not that worth? I'm referring to the bonus issue.

If they have accumulated losses, then twod cannot be that worth, isn't it?

Actually the answer to your question depends on the risk you can take.. TWOD's assets are trees hence it will take few years to mature where then only it will be productive..
As some pointed out this can run as well as fall due to low NAV value after Capitalization.

smallville wrote:

ccsentha wrote:So all this mean good to buy TWOD at this level or is it not that worth? I'm referring to the bonus issue.

If they have accumulated losses, then twod cannot be that worth, isn't it?

Actually the answer to your question depends on the risk you can take.. TWOD's assets are trees hence it will take few years to mature where then only it will be productive..
As some pointed out this can run as well as fall due to low NAV value after Capitalization.

When reserves are capitalized, NAVPS will remain same isn't it or come down little? bcoz certain amount of the reserves is going to be transferred into capital hence increasing the Net assets a little, anyway NAVPS will come a bit down as bonus is valued at 8.75, isn't it??

today pass Rs 20.50

So Touchwood reevaluated the land, say 1 million land was given 2 million label add that to books, do nothing else, no business, no revenue, no real cash, nothing, then make more new casino chips out of that and doled them out for the players to play.