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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » 16-May-2013 Malwatte Valley Plantations - Offer to purchase Ordinary & Non Voting Shares

16-May-2013 Malwatte Valley Plantations - Offer to purchase Ordinary & Non Voting Shares

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sriranga

sriranga
Co-Admin
16-May-2013 Malwatte Valley Plantations - Offer to purchase Ordinary & Non Voting Shares Mal110
16-May-2013 Malwatte Valley Plantations - Offer to purchase Ordinary & Non Voting Shares Mal210
http://www.cse.lk/cmt/upload_cse_announcements/2251368699733_.pdf

http://sharemarket-srilanka.blogspot.co.uk/

Jiggysaurus

Jiggysaurus
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Surprisingly shareholder friendly move by a historically shareholder unfriendly management.

Good lesson to stingy cash hoarders like KGAL and RENU

VISA


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
what do you think about the price of 5 and 3.50
non voting is already trading in 4.50 to 4.70 range

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Hi SLSTOCK
can you explain bit this.
i don't know how is effect current share price. I don't have that much knowledge
Thank You



Last edited by stockback on Thu May 16, 2013 5:59 pm; edited 1 time in total

troy

troy
Moderator
Moderator
I believe this would trigger MAL N over 5 but not sure about the implication on Mal X.

But still feel its also going to increase since this move will further reduce the number of X shares.

Experts pls give your opinions/target prices

troy

troy
Moderator
Moderator
For Mal N:

(X*7)/6=5
X=4.3

So the fair value of Mal should be 4.30. Is my maths correct?

Jana

Jana
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
It it like repurchase .. If we don't like to sell to them we can keep it without any change number of shares isn't it??
bit confuse ...
please explain bit this..

MAL.X already very very illiquid ..if they purchase 3 million then public holding is very less ..so MAL.X follow equal price to N in the market ..isn't it ????

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Jiggysaurus wrote:Surprisingly shareholder friendly move by a historically shareholder unfriendly management.

Good lesson to stingy cash hoarders like KGAL and RENU

Nothing much to write home about this ! they might as well have distributed the Rs 175 Million as a 0.70 cts Dividend. yes 10 % withholding tax impact of Rs 17.5 wold be felt by the shareholders, but now the share price guidance for non voting shareholders has been lowered from current market price 4.60 to 3.50, the repurchase price.
Remember this share split adjusted price was Rs 10 when they issued 20 million non voting shares at rs 1 (2 million shares at rs 10 before split), to a strategic friendly shareholder in exchange for land. this only serves to benefit that large single non voting shareholder to encash part of their entitlement.
If they really wanted to be shareholder friendly, they should have given the repurchase at NAV closer to Rs 9 (Voting) with a lesser ratio than 1 : 7 (maybe 1 : 12) thereby positively impacting the guidance for the market price and that signalling effect would have helped to re-rate beyond the 4-5 range that this stock is stuck in for some time.

Jana

Jana
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@troy wrote:I believe this would trigger MAL N over 5 but not sure about the implication on Mal X.

But still feel its also going to increase since this move will further reduce the number of X shares.

Experts pls give your opinions/target prices

yes MAL.N pass 5/= tomorrow and if it is ...then MAL.X also pass 5/= tomorrow because most of them buying X also at 5/= level who are they not know about this repurchase message.

so we can Grab MAL .N under 5/= quickly ...

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
what i understood. i may wrong.
company going to buy some amount shares and cancel those shares.
spending 175 m, 14.28% are going to buy and cancel it.
I think share price is going to high after this happen.
14.28% shares are cancelling. this is opposite of Right Issues. Right Issue put share price lower and this one put share price bit high.
experts this is my idea please give me your experts comments.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
Friends these are the concerns i have about this share repurchase

For Non - Voting as "The Alchemist" pointed out the company has issued 2,300,000 Non Voting Shares @ 10/= to a company to acquire the land and the shares listed on 04.08.2010, then on 08.03.2011 this became 23,000,000 Million Shares due to the sub - division.

From the listing date this company sold 3,834,000/= shares to others in the market.

About Voting presently it trading around 4.60/= so with the taxes it will be 4.65/=

The Buyback price is 5/= so the profit will be 0.35/= per share, if you want to make a Rs. 1,000/= Gain how much anybody need to invest it if going to buy now?

If am not mistaken we have to give 2,858 shares to the company, for that we must buy around 20,000 shares so approximate investment will be 100,000/=

Golden Question is what will be the Share Price after the buy back?

Correct me if my computations are wrong!!!

KDDND

KDDND
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Hi!

I believe that MAL should have invested this money in CSE during last year... in shares like which gives better dividend in regular manner....
So, it gives many returns than this exercise......

Am I right.......? scratch

UAEBOY

UAEBOY
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@stockback wrote:what i understood. i may wrong.
company going to buy some amount shares and cancel those shares.
spending 175 m, 14.28% are going to buy and cancel it.
I think share price is going to high after this happen.
14.28% shares are cancelling. this is opposite of Right Issues. Right Issue put share price lower and this one put share price bit high.
experts this is my idea please give me your experts comments.

Agree with you...Those 14.28% will be cancelled once company purchased...This is a share repurchase agreement from the market...

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
simple.
share price going to over 5 rupees after happen repurchase.
Think About Right Issue. they did.
share price is Rs. 10 and after right issue that fall below right issue price(right issue price Rs.6.75/- )

I think this is like buy share and burn it. so then number of shares will be reduce.
think about 175M using for Dividend. that means that amount will be lost buy company and its going to share holders.

Repurchase and cancelling. minimize the number of shares. Net assest is going to high and also future P/E ratio is going to high value.

I think if we hold share then after repurchase. share price is going to more than Rs. 6-7 easily. with good financial report it can be go further. this is my idea
please think deeply before investing on this.

taniya1111


Manager - Equity Analytics
Manager - Equity Analytics
@stockback wrote:simple.
share price going to over 5 rupees after happen repurchase.
Think About Right Issue. they did.
share price is Rs. 10 and after right issue that fall below right issue price(right issue price Rs.6.75/- )

I think this is like buy share and burn it. so then number of shares will be reduce.
think about 175M using for Dividend. that means that amount will be lost buy company and its going to share holders.

Repurchase and cancelling. minimize the number of shares. Net assest is going to high and also future P/E ratio is going to high value.

I think if we hold share then after repurchase. share price is going to more than Rs. 6-7 easily. with good financial report it can be go further. this is my idea
please think deeply before investing on this.
Yes what you are telling is true. But there are some problems as well. First thing about MAL.X, their offering price is 3.50, But current trading price is 4.60. So will people sell about 3 million shares at 3.50. I dont think so similarly it seems buying 32 million shares of MAL.N would also be difficult. Those are basic requirements for this has to happen. As well this move will be good to share holders who bought this once the share price dropped below 6 (There is no initial impact for share holders with break even price more than 5, but probably this would be good for people with break even price less than 6 - this is a my assumption only ) but what about people who bought this when this was trading at higher price. I would say more than 6. There will not be any initial benefit for them, 0.75 - 0.80 dividend could have been better for them.But NAV, EPS will be higher after this finished. Future EPS would also be higher if they can maintain at east current profit. So this would finally be a good move for the company's and all share holders future. But to happen all above things they should be able to buy those shares successfully at mentioned prices.

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
in future they will announce more news. buying 6.50 ....7.50 ..... some thing like this way. share price is going to high. but Burning share amount is low.

They did two right issue (unwanted). now they try to fixed that problem.
please think deeply before investing on this.

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Technically Stockback, this should increase the value of shares ( eps) as there will be lesser number of shares in the market after the buy back.

This was not a bad move by MAL without giving all in dividends. MAL liquidity increased too much after 10:1 split. NOw time to do some repair.

Btw, best also to study the shares that can stand a price drop in tea and cope with the wages.


@stockback wrote:Hi SLSTOCK
can you explain bit this.
i don't know how is effect current share price. I don't have that much knowledge
Thank You

Chutta


Equity Analytic
Equity Analytic
Surprised Shocked

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Slstock please give me your ideas about MAL repurchase.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
http://forum.srilankaequity.com/t28349-16-may-2013-malwatte-valley-plantations-offer-to-purchase-ordinary-non-voting-shares#166286

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