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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » TOUCHWOOD capitalization of reserves

TOUCHWOOD capitalization of reserves

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61TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 12:31 pm

smallville


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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.

62TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 12:49 pm

smallville


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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..

63TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 12:57 pm

Basnayake


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

64TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 12:59 pm

RIO


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@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


.

anjelo


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@sanju351 wrote:
@kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 lol! lol! 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???

66TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 1:08 pm

sanju351

sanju351
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@anjelo wrote:
@sanju351 wrote:
@kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 lol! lol! 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 ..
lol! lol! lol! lol! lol! lol! lol! lol! lol!

67TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 1:34 pm

kalum


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
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.

68TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 1:44 pm

Sana


Senior Equity Analytic
Senior Equity Analytic
@sanju351 wrote:
@anjelo wrote:
@sanju351 wrote:
@kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 lol! lol! 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 ..
lol! lol! lol! lol! lol! lol! lol! lol! lol!


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.

69TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 2:10 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@RIO wrote:


XC


.

Thanks for pointing out.. corrected Wink

70TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 3:31 pm

anjelo

anjelo
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Sana wrote:
@sanju351 wrote:
@anjelo wrote:
@sanju351 wrote:
@kasun333 wrote:mokakda itn a apitath keyandako balanda sanju351 lol! lol! 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 ..
lol! lol! lol! lol! lol! lol! lol! lol! lol!


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 :-)

71TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 4:31 pm

market bull

market bull
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
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

72TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 5:09 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
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.

73TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 5:53 pm

econ

econ
Global Moderator
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.. Razz



Last edited by econ on Tue Oct 02, 2012 8:00 pm; edited 1 time in total

74TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 6:00 pm

sureshot

sureshot
Vice President - Equity Analytics
Vice President - Equity Analytics
bonus = free
Rights = pay and buy

Very Happy

75TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Tue Oct 02, 2012 9:26 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
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.

76TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 12:46 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
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?

77TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 1:02 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@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.

78TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 1:30 am

ccsentha


Vice President - Equity Analytics
Vice President - Equity Analytics
@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??

79TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 6:28 am

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
today pass Rs 20.50

80TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 8:30 am

aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
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. Smile

81TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 8:33 am

TortoizePlus

TortoizePlus
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote: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.

Thanks chinwi, for the great insight of accounting.

I bought TWOD only for trading purposes. I don’t think it is a good counter for buy and hold like VONE and REEF.W19.

Btw, I can remember you had a TWOD lot bought at 35. Did you sell that? One time, it was a risk free investment to you and mono (long time no see friend).

82TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 8:36 am

TortoizePlus

TortoizePlus
Manager - Equity Analytics
Manager - Equity Analytics
@aj wrote: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. Smile

Your point is valid for other businesses but not for the business that TWOD do.

83TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 8:38 am

aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I thought trees (and may be the piece of land) of touchwood business are owned by the customers who buy the tree lots as investment like the depositors who put money in the bank. I thought touchwood was just the "gardener" not the owner of the trees.

84TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 9:03 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@ccsentha wrote:
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??

මේ කිසිවක් වෙන්නේ නැත.
මේ ක හරියට උඩ සාක්කුවේ තුබුන සල්ලි වලින් කොටසක් යට සාක්කුවේ තුබුන සල්ලි වලට එකතු කරනවා වගේ වැඩක්. එකතුව, වටිනාකම සමානයි.
එකම වෙනස උඩ සාක්කුවේ සල්ලි අපිට ඕන වෙලාවක ණය ගෙවන්න එහෙම පිටට දෙන්න පුළුවන්. යට එකෙන් ගන්න එක ලේසි නැහැ. බංකොලොත් උනොත් පුළුවන්. ඊට අමතරව capital reduction වගේ කරනවා.
8.75 කියන ගාන කොටස් මිල හෝ NAVPS සඳහා අදාල වෙන්නේ නැහැ.
එය ඩිරෙක්ටරල සංචිත වලින් ප්‍රාග්ධනයට මාරු කරන්න තීරණය කල මුළු මුදල් ප්‍රමාණය බෝනස් දෙන කොටස් ප්‍රමාණයෙන් බෙදුවම එන ගානක් විතරයි. ඒ අය එම මුදල් ප්‍රමාණයම මාරු කරලා 1 : 1 බෝනස් දෙන්න තීරණය කලා නම් එම ගාන 4.40 වෙන්න තිබුන. 1: 10 ක් දුන්න නම් සත 44 ක් වෙනවා.
මෙහෙම වෙන්නේ නව සමාගම් පනත අනුව par value එකක් (නාමික අගයක්) නැති නිසා.

( 2007-07 පනත වගන්තිය 49 (4) - සමාගමක කිසිදු කොටසකට නාමික හෝ සමක අගයක් නොතිබිය යුතුය.)

නමුත්, කලින් පනත අනුව රුපියල් 10 කොටස් වැනි සෑම කොටසකටම නාමික අගයක් තිබුණි. එවිට මෙලෙස මාරු කළ හැකි වුයේ කොටසේ නාමික අගයට සමාන මුදලකි. එනම් කොටස් ලක්ෂයක් බෝනස් දෙනවා නම් ප්‍රාග්ධනය වෙත ලක්ෂය x රු. 10 = දස ලක්ෂයක් මාරු කළ යුතුයි.

Note :
DFCC බැංකුව ( DFCC . N ) සංස්ථා ගත කර ඇත්තේ සමාගම් පනත මත නොව වෙනම පනතක් මත වන නිසා එහි තාම ක්‍රියාත්මක වන්නේ පැරණි ක්‍රමයයි. එනම් නව 2007-07 සමාගම් පනත එයට අදාල නැහැ. බෝනස් දෙන්නෙත් පැරණි ක්‍රමයට.


NOTE 2 : ඉහත සාක්කුවෙන් සල්ලි මාරු කරන ලෙස දැක්වුයේ සමස්තය. නමුත් මේ TWOD එකේ නම් සල්ලි වෙනුවට උඩසක්කුවේ තිබුන ඉදිරි දාතම සහිත චෙක් එකක් කිව්වා නම් වඩා හොඳයි.

85TOUCHWOOD capitalization of reserves - Page 4 Empty Re: TOUCHWOOD capitalization of reserves Wed Oct 03, 2012 9:15 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@TortoizePlus,

As you said TWOD was a trader friendly stuff for many years. It did well with me in the initial years. Now I have few thousands, a small qty. compared to what I had .

I do not like to criticize this share. Because it can become a super blue chip one day, IF they survive next high risk decade .

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