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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Need a advice about VIDULLANKA Announcement:

Need a advice about VIDULLANKA Announcement:

Go down  Message [Page 1 of 1]

aikinava


Stock Trader
I am very new to Share Market. Last week I just invested few amount in Share Market.  
Can anyone explain me, about below announcement from VLL. 

Does that mean, if I have existing shares then I can buy new shares each Rs 1 rupee. 

CAPITALIZATION OF RESERVES (DATES)   
21 August 2015
Date of Initial Announcement: - 14.Jul.2015 
Proportion: - One (01) new Ordinary Share for every (2) Two existing Ordinary Shares 
Date EX: - 23.Sep.2015 
General Meeting / Allotment: - 22.Sep.2015 
Qty Offered: - 238,634,597 
Consideration: - Rs. 1.00 per share 
Share Transfer Book Open 

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Does that mean, if I have existing shares then I can buy new shares each Rs 1 rupee.

If you have 2 shares they give 1 share free of charge. You do not have to pay.
You can see the wording "CAPITALIZATION OF RESERVES ". That means they have money in their reserves and they will use that money to pay behalf of you. In other words they are converting reserves to capital.

aikinava


Stock Trader
Dear Chinwi,

Thanks for valuable explanation. let me clarify further. please educate me, if I am wrong. 

Current VLL price is 10.7 

Example - if I buy 10000 shares before the "Date EX" , then VLL gives free 5000 share for me. then I can earn very good profit by selling additional shares. 

Is there anything else to think before I buy those share?
Seems this very good deal.. 

Please share your valuable knowledge and experience with me.

Thanks

SLBOY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
After capitalization price will not be at current price level.  It may go down and adjust according.  You have to think about the price of VLL after capitalization

aikinava


Stock Trader
Dear SLBOY,

Thanks for sharing ur knowledge. Does that mean, there is high possibility to drop the price after capitalization. 

it is not recommend to buy at this moment. 

Thanks

SLBOY


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I am not an expert.  But as per my understanding VLL have over valued now.

freebee wills

freebee wills
Equity Analytic
Equity Analytic
@SLBOY wrote:I am not an expert.  But as per my understanding VLL have over valued now.
VLL is over valued and The director (Doctor) has sold his shares but not all of them.
If really want to buy collect them lower level

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Facts to consider:

Number of shares in issue will be increased by 50 %.

Asset Val per share was 3.28. new asset val will be Rs. 2.10.

Earning per share will also go down at the same rate.

last Year EPS was 0.75 . It will be adjusted to 0.50 .

If you buy 2000 @ 10/- you cannot sell 3000 @ 10/- after bonus.



peacockman


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Chinwi wrote:
Does that mean, if I have existing shares then I can buy new shares each Rs 1 rupee.

If you have 2 shares they give 1 share free of charge. You do not have to pay.
You can see the wording "CAPITALIZATION OF RESERVES ". That means they have money in their reserves and they will use that money to pay behalf of you. In other words they are converting reserves to capital.

You're right CHINWI!

"CAPITALIZATION OF RESERVES " is more commonly known as a ''Bonus issue''. This is a situation in which you are given shares free of charge in a specific proportion to their current holding. The required funds are taken from the reserves of the Company.

bandara 123


Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote:Facts to consider:

Number of shares in issue will be increased by 50 %.

Asset Val per share was 3.28. new asset val will be Rs. 2.10.

Earning per share will also go down at the same rate.

last Year EPS was 0.75 . It will be adjusted to 0.50 .

If you buy 2000 @ 10/- you cannot sell 3000 @ 10/- after bonus.




Chinwi,

You can't say if anybody buys it now for Rs10.70 and he wont be able to sell the share at the same price. But who knows (now the VLL has entered in oversease business - Hydro power in  Cambodia first time by a sri lankan company)If they produce better results some times you may be able to sell your shares even above Rs10.70. in future.

Same thing happened to SDB as well. Before the Scrip issue - same as capitalization -  it was trading around Rs155 and immediately after the issue it came down to Rs139 levels and withing a month/ 2 months now trading at Rs170 levels after touching Rs175.

Hence it is not correct to say share price will come down every time after a issue. If the company is performing well nothing to worry.

VLL is a very good investment right now.

* If you purchase 100,000 shares @Rs10.70 your investment cost will be Rs1,070,000(with our brokerage).

* Issue is 1 share for every 2 held.

*You will get 50,000 shares from the company free of charge.

*Now your investment cost will be Rs1,070,000. But
you have 150,000 shares with you.Hence cost per share is Rs7.133 - Down from Rs10.70.

*After the issue NAV will be Rs2.20 and the annualized EPS will be Rs0.67 cents.

*If you take VPEL. Its NAV stands at Rs3.12 and annualized EPS is Rs1.0. Its a differance of Rs0.33 cents.

*If you compare the growth rate of VPEL and VLL for the June Q(1st quarter) you can clearly see the speed of growth of VLL.

*Revenue growth =  VLL is - 32.7% & VPEL is only 17%

*Net profit growth =  VLL is - 186.6% & VPEL is only 21%

*EPS growth = VLL is staggering 212.5% & VPEL is only 25%

*Hence it is very clear that the growth speed of VLL is better than VPEL.

*Taking all these factors in to consideration my target price after the capitalization of VLL is around Rs7.50 -  Rs8.50.range.

*Further I strongly believe immediately before the issue VLL may touch even Rs12 levels provided the superior growth displayed by the company in first Q.

*Conclusion - VLL is a good investment @ current mkt price of Rs10.70.

peacockman


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Guys,
Before the announcement VLL rose up by Rs. 1.30 (from 9.30 to 10.60). Because the current EPS is so good, I hope it may get another rise up before the X-Date and may touch 12.00 levels.

(If you refer my P/V/R (Prics vs. Volume vs. RSI) charts, you can realize, that VLL jumped over to 10.60 level from 9.30 level before the 1st announcement & the current RSI is good.  
If you refer the EPS chart, you can realize that the current EPS is bigger than the earlier EPS.)




Given below are P/V/R Charts & Trailing EPS Chart of VLL.

First Three : PVR charts

Fourth one : EPS chart


Need a advice about VIDULLANKA Announcement: Big



Last edited by peacockman on Sun Aug 23, 2015 4:00 pm; edited 2 times in total

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