Rank: Elder Joined: 2/26/2012 Posts: 15,980
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stocksmaster wrote:stocksmaster wrote:cnn wrote:mwekez@ji wrote:A crazy observation is that they paid PKF to value the company at KES 8.5B. Thats a price per share of a whopping 21 bob!!! ... No details given on valuation methodology!!! ... DAMN!!!... CMA is sleeping on the job for not demanding information memorandum before this counter is listed!!! I saw that and i was thinking how did they get to this....without the IM,my money stays safe. At a net income of Ksh 167.7M for 2012 and a Book Value of Ksh 8.5B (which i assume will be the basis of determination of listing price); its return on equity = net income/shareholders equity is a depressing 1.97%. Compare this with the ROE of Trans Century at 15.1% (P/B of 1.8); Centum at 18.4% (P/B of 1.0); Housing Finance at 15.0% (P/B of 1.1). At such a low ROE, which is about an eighth of its peers,i would price the share at a tenth of Ksh 21 hence a price of Ksh 2.00. The price of Ksh 2.00 would mean a P/E of 4.30 which would be comparable to HFCK (p/e 7.5); Centum (p/e 5.6), trancentury (p/e of 12) all of which have better investor returns. Based on the 2011 results which were a loss position, i think i'll stay out of this one unless their is a significant discount on the Ksh 2.00. Happy Hunting. Happy hunting.  "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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