@Monster wrote:Good analysis SW (Can I call you SW ) + Rep from me as well.
RENU, CABO and COLO should valuated based on the investment they hold apart from their core business.
If you further analyze as of CABO annual report 2009/2010, the equity investment worth more than the current market price. They have disposed some their investments during 2QFY10 and re-invested during 3QFY2010. It will be interesting to see the annual report.
As of 2009/2010 annual report company was able to maintain full occupancy of all the floors with M/S Julius & Creasy and other tenants. Hence company is safe on it's core business.
CABO and RENU are part of my long term investments.
Very well spotted Monster, yes CABO seems to have disposed some of their investment in the 2QFY2010. This is clearly visible when you compare their non-operating income for the four quarters ending 31st March 2011.
Comparison of CABO’s Quarterly Non-operating Income
1QFY2010 – Rs. 12.3 million
2QFY2010 – Rs. 113.2 million
3QFY2010 – Rs. 11.6 million
4QFY2010 – Rs. 7.1 million
See the huge increase in non-operating income in 2QFY2010 – This is likely to be an income generated by disposing some of CABO’s investments. I also observed the same pattern in 4QFY2009 and 1QFY2008. Therefore it can be reasonably inferred from these observations that CABO has been systematically disposing its investments each year and booking some capital gains. Also the investment value in the BS continue to increase which suggests that CABO has been reinvesting the proceeds from disposal of its investments.
Also the property acquired by the company recently which is located at No. 35, 35 1/1 & 37 at Janadhipathi Mawatha, Colombo 1 is going to be developed as a car park as per the 2009/2010 annual report which will eventually increase the revenue generated by the company’s core business. However, this will be a nominal figure compared to company's non-operating income.