TelesHope wrote:@Seyon, unless you dig into the books of the company, you can not predict the EPS and BV of a company after a rights issue.
Total Number of Shares after 19:1 rights = 114,357,140 and the Debt/Equity % (According to September Qtr) = 1823% (Highly Geared)
Assuming a conservative PE of 15; the company should make of an annual PAT (Profit after tax) of 610 Mn (Qtr PAT = 152.5 Mn) with an EPS of 5.3 for a share price of Rs. 80. Similarly, it should make of an annual PAT (Profit after tax) of 1.15 Bn (Qtr PAT = 286 Mn) with an EPS of 10 for a share price of Rs. 150.
Unlike some other sectors, construction industry can not do miracles within a short period. This company is highly geared, and until they show real PAT, it is just a speculative share.
Anyway, this share is illiquid because the public float is ~10%. So, easy to manipulate the prices until dump investors are there in CSE.
Hi Telescope
You have not answered my question about BV and EPS. You started talking bla bla about gearing. Before I investing on KAPI, I have analyzed it financial before the rights issue..
Layman can understand about BV and EPS after the rights issue. Each rights has book value. i.e Cash Value.( KAPI right has Rs.33 book value) and when calculating the EPS, EPE will get diluted. I ll elaborate my calculation for the layman investors like you..
Before Rights Issue
Equity --------------------- Rs.347,740,238
No of Shares ------------- 5,717,857
NAV Per Share ---------- Rs.60.80 ( Business Value Per Share)
Total Attributable Value to Equity Shareholder ------------ Rs.143,719,884
No of Shares ------------- 5,717,857
NAV Per Share ---------- Rs. 25.13 ( Value /Share to Equity Shareholder)
Total Group Earnings --------- Rs.(15,840,615)
EPS/ Share ------------- Rs. (Rs.2.77)
The Right Issue
Right issue 19:1 @ 33
Total Share issued on Rights ----------------- 108,639,283
Total Proceeds From Rights ----------------- Rs. 3,585,096,339.00
NAV/ Share After Rights
Equity ----------------------------------------------- Rs.347,740,238
Total Proceeds From Rights ----------------- Rs. 3,585,096,339
Total -----------------------------------------------Rs. 3,932,836,577
Total No of Shares After Rights-------------- 114,357,140
NAV Per Share ---------- Rs.34.40 ( Business Value Per Share)
Total Attributable Value to Equity Shareholder ------------ Rs. 143,719,884
Total Proceeds From Rights ----------------- --------------------Rs. 3,585,096,339
Total ----------------------------------------------- -------------------- Rs. 3,728,816,223
Total No of Shares After Rights----------------------------------- 114,357,140
NAV Per Share ---------- Rs. 32.60 ( Value /Share to Equity Shareholder)
EPS / Share After Rights
Total Group Earnings --------- ---------------------------------- Rs.(15,840,615)
Total No of Shares After Rights----------------------------------- 114,357,140
EPS/ Share ------------- Rs. (Rs.0.14)
Now I come to your gearing issues.
Total borrowing of Group ( As per Sep 2010)
Interest Bearing loans---------------------------------- Rs. 707,045,353
Non Interest Bearing loans--------------------------- Rs. 848,278,262
Overdraft ------------------------------------------------ Rs.226,647,954
Total Borrowings --------------------------------------- Rs.1,781,971,569
Total Interest Expenses.-----------------------------------Rs 67,051,237
The Purpose of right Issue
The purpose for which the proceeds of the issue are to be utilized
1. To capitalize loans received for the acquisition of companies previously
2. To acquire Northern Power Company (Pvt) Ltd
3. To Finance Working Capital of the company
http://www.cse.lk/cmt/uploadAnnounceFiles/9961288151500_444.pdf
The proceeds of this Rights Issue will be used for the 100% purchase of Northern Power Company Private Limited, a 30MW HFO power plant located in Chunnakam, Jaffna, as the largest provider of electricity to the Jaffna Peninsula. The balance of the Rights Issue proceeds will be used for capital expenditure and working capital requirements of the MTD Group of Companies.
http://srilankastockpicks.blogspot.com/2010/12/mtd-walkers-plc-announce-rights-issue.html
We do not know about the numbers of the loans received for the acquisition of companies previously and the amount required to acquire Northern Power Company (Pvt) Ltd. However I would say major part of the loan will be settled from the right issue. Hence Finance cost amounts Rs.67Mn will be reduced and this would strengthen the bottom line. This scenario will highlight only on 4th quarter results.
Let us workout the utilization of right issue
Total Proceeds From Rights ----------------- --------------------Rs. 3,585,096,339
Interest Bearing loans---------------------------------- ------------- Rs. 707,045,353 1st Preference to settle
Overdraft -------------------------------------------------------------- Rs.226,647,954 2nd Preference
Non Interest Bearing loans--------------------------- -------------- Rs. 848,278,262
(This loan may be obtained from parent company, there should be flexibility for the repayment)
Hence the amounts of Rs.2Bn (after settlement of interest bearing loans and OD) will be utilized for the acquisition of Northern Power Company (Pvt) Ltd , other investment opportunities and working capital requirement.
We can see the restructured and sound balance sheet from the 4th quarter. Further income generate from new projects ( mentioned in previous ) also will contribute to strengthen the company performance and value…
Keep on Investing in growth sectors……
Happy Trading
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