Hi, I understand valuing a company is a complex affair, though is a company technically undervalued if, for example, it has a market cap of $3m and has $4m cash in the bank? Lets say the company has several small scale projects ongoing, at early exploration stages.
Cash at hand > Market cap...undervalued?
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prawn_86
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If this were the case then the market would be assigning a value of negative $1mill to it.
If it has $4mill cash (assets) then you would expect it to be priced above that. Unless perhaps there were some things such as debt or gearing, but thats where i start to not know as much.
Have you found a co with a market cap smaller than its assets?
Lion Select (LST)
August 30th Net Tangible Assets and Cash $418 Million , Current Market Cap $370 Million
The market is a strange place.
Sorry got it wrong Current Market Cap is only $295 Million
prawn_86
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hmm... might have to look into it 
i'll post my (limited) thoughts on it later
i'll post my (limited) thoughts on it later
doogie_goes_off
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I've found one... AXT Argo Exploration - Market Cap is 3.28 mill approx with 82 mill shares on issue at 4c. Cash at hand is 4.4 mill. A difference of 1.12 mill or 1.3c per share!!!
prawn_86
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Heaps out there at the moment.
The market is assigning a pessimistic valuation to them. Basically 'the market' thinks that the co's will squander their cash and not come up with anything of value. Partly due to dropping commodity markets, partly due to fear.
If you look hard enough there are some co's with positive cashflow and no debt that are trading below their cash value. Now thats a bargain
The market is assigning a pessimistic valuation to them. Basically 'the market' thinks that the co's will squander their cash and not come up with anything of value. Partly due to dropping commodity markets, partly due to fear.
If you look hard enough there are some co's with positive cashflow and no debt that are trading below their cash value. Now thats a bargain
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Coincidentally, AXT is a portfolio stock of 'Fat Prophets'
Unfortunately for them they bought in at 44c in June 07
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Just be careful at how old the NTA data is. And especially the calculations used to value them.
Centro has quite a good NTA till it was updated...
Centro has quite a good NTA till it was updated...
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Skyquake - this isn't NTA we're talking about - this is cash position - but the advice still holds in that its important to check the accuracy of the figures and how current they are, and also look for debt on the balance sheet and also their capital structure in general. e.g. if there are options that are in the money or close to the money they should probably be diluted into the market cap figure. Also sometimes there are other shares on issue that aren't quoted (e.g. escrowed stock, convertible notes/preference shares etc.).
But there are a lot of companies trading below, at or just above their net cash position at the moment and some of them are generating strong positive cashflow from very comfortably profitable operations.
But there are a lot of companies trading below, at or just above their net cash position at the moment and some of them are generating strong positive cashflow from very comfortably profitable operations.
rub92me
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Yep, a good example of that would be PPP. No debt. Cash in the bank about AUD 135 million. PE of about 2.4. Anticipated revenue for 2008/2009 about AUD 75 million (assuming a pessimistic average oil price at USD 65 and AUD/USD rate of 0.75). And a market cap of AUD 120 million. You gotta laugh in the current market....Heaps out there at the moment.
If you look hard enough there are some co's with positive cashflow and no debt that are trading below their cash value. Now thats a bargain
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Ahh whoops, didn't read it properly.
But yeah, cash position can be offset by debt obligations or contracts... Personally I am on the lookout for those too, but of better known brand names. Eg. From memory, Bluescope and Qantas respectively traded below their NTA (Bluescope below cash too probably) on the back of bad conditions and bad media coverage, and boy did they make a comeback!
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CFE has large cash backing per share far greater than its market cap...
read the thread...
Ive been warned off the stock due to management and some of the connections management have with companies such as RRS...
also...
PPP is at 100% cash backing or very close to it...
and it still has production from Tui of 3 million more barrels to come...
AWE are proposing a 6 well program to increase reserves in the surrounding area which will cost PPP 30million for big leverage into further revenue streams...(low down) and fully backed by cash...
...
there are a few others... at the spec end of the market (micro caps) is a different story when it comes to cash backing... the market discounts cash highly because market believes that the money will be spent...
NZO is 500 MCap and 400M cash...
and it has two major projects going into production next year...
Kupe will add minimum of 100million cash for 20 years...
(it was built 3 times larger so it could handle much bigger flow rates)... as the surrounding area has big upside potential...
and NZO have Pike also...
NZO is the most undervalued stock on the New Zealand Stock Exchange...
NZX...
good luck all... becareful when you chase stocks with cash backing...
finding companies with great projects is a better place to start...
thank you...
.^sc
read the thread...
Ive been warned off the stock due to management and some of the connections management have with companies such as RRS...
also...
PPP is at 100% cash backing or very close to it...
and it still has production from Tui of 3 million more barrels to come...
AWE are proposing a 6 well program to increase reserves in the surrounding area which will cost PPP 30million for big leverage into further revenue streams...(low down) and fully backed by cash...
...
there are a few others... at the spec end of the market (micro caps) is a different story when it comes to cash backing... the market discounts cash highly because market believes that the money will be spent...
NZO is 500 MCap and 400M cash...
and it has two major projects going into production next year...
Kupe will add minimum of 100million cash for 20 years...
(it was built 3 times larger so it could handle much bigger flow rates)... as the surrounding area has big upside potential...
and NZO have Pike also...
NZO is the most undervalued stock on the New Zealand Stock Exchange...
NZX...
good luck all... becareful when you chase stocks with cash backing...
finding companies with great projects is a better place to start...
thank you...
.^sc
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I have taken this from another poster named boysy...
thank you...
outstanding shares 588,612,110
current price asx = A$0.185
market cap A$ 108.9 million
cash on hand 30/06/2008
79 million USD
15 million NZD
6 million HKD
at current exchange rates this is 79 / 0.66 = A $ 120 million
15/ 1.1 = A $ 13.5 million
6/ 5.11 =A $ 1.1 million
production of oil since 30 june 2008 = 10 % of 3,500,000 barrels of oil @ average of
A$145
=A$50 million - opex - tax (30%) - royalties ( 25%)
= A $ 45 - $ 6 milion - 15 million - 12.5 million
= profit around A$16 million since 30/06/2008
so all up
market cap $108.9 million
less : net cash held $150 million ( made up of USD$79 million
NZD$15million
HKD$1.1
cash from operations since 30/06/2008 AUS$16
market cap less net cash = -(negative) $41.1 million
cash held per share currently around A$0.255
current sp on ASX A $ 0.185
so currently no value is being attributed to PPPs 10 % share in TUI . PPPs share of daily production being in the region of 3200 - 3500 bopd even at these prices that brings in around A$ 380,000 gross or around $180,000 net into PPPs pocket.
No woder the directors are stocing up on these prices
PPP is that good...
.^sc
thank you...
outstanding shares 588,612,110
current price asx = A$0.185
market cap A$ 108.9 million
cash on hand 30/06/2008
79 million USD
15 million NZD
6 million HKD
at current exchange rates this is 79 / 0.66 = A $ 120 million
15/ 1.1 = A $ 13.5 million
6/ 5.11 =A $ 1.1 million
production of oil since 30 june 2008 = 10 % of 3,500,000 barrels of oil @ average of
A$145
=A$50 million - opex - tax (30%) - royalties ( 25%)
= A $ 45 - $ 6 milion - 15 million - 12.5 million
= profit around A$16 million since 30/06/2008
so all up
market cap $108.9 million
less : net cash held $150 million ( made up of USD$79 million
NZD$15million
HKD$1.1
cash from operations since 30/06/2008 AUS$16
market cap less net cash = -(negative) $41.1 million
cash held per share currently around A$0.255
current sp on ASX A $ 0.185
so currently no value is being attributed to PPPs 10 % share in TUI . PPPs share of daily production being in the region of 3200 - 3500 bopd even at these prices that brings in around A$ 380,000 gross or around $180,000 net into PPPs pocket.
No woder the directors are stocing up on these prices
PPP is that good...
.^sc
prawn_86
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Yeh and PPP still wont release a dividend. Pathetic management IMO, who are most likely to piss it up the wall from what i have seen so far.
No vision or drive, hence why the negative pricing by the market. How hard can it be to return 1 or .5 of a cent to holders to generate some interest?
All IMO only
No vision or drive, hence why the negative pricing by the market. How hard can it be to return 1 or .5 of a cent to holders to generate some interest?
All IMO only
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prawn - they don't care - they are the major shareholders - they're not going to p*ss their own money up against the wall. The more shares sold at this level the more they can buy for themselves.
The reason they haven't done a buy back (the most efficent way to return capital imo) is because they are doing their own private buy back.
The reason they haven't done a buy back (the most efficent way to return capital imo) is because they are doing their own private buy back.
prawn_86
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Yeh that would be/is my other arguement. They are slowly buying the co up and may launch a t/o or something eventually so full potential is never realised for others holding.
Only have to look at the chart to see that their performance has been quite underwhelming (price has done nothing on the up or downside really), even in the bull period.
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come on posters...
lets sit back and think about this for a second...
sure PPP's SP has fallen, so has every other stock...
In hignsight it has been great the Pan did not go out on the acquisition path...these opportunities only get cheaper over time...
paying dividends is not the answer... the market value of the company just falls by the amount of the dividend (and then you have to pay tax on it)...
... why not sit on a nest egg...
its not the time in the market to be doing silly things...
Ive not tipped PPP until now...
this is a great buy...
the numbers speak for themselves...
company is not going on a rampage... good things will come to them in time...
did you read the presentation today...
looked good to me...
heres a sneak peak...
.^sc
lets sit back and think about this for a second...
sure PPP's SP has fallen, so has every other stock...
In hignsight it has been great the Pan did not go out on the acquisition path...these opportunities only get cheaper over time...
paying dividends is not the answer... the market value of the company just falls by the amount of the dividend (and then you have to pay tax on it)...
... why not sit on a nest egg...
its not the time in the market to be doing silly things...
Ive not tipped PPP until now...
this is a great buy...
the numbers speak for themselves...
company is not going on a rampage... good things will come to them in time...
did you read the presentation today...
looked good to me...
heres a sneak peak...
.^sc
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this is more or less the exact same sentiment we watched on a New Zealand Oil and Gas thread... NZO...
even when Tui production hit, the share price did not take off for 7 months...
7 whole months...
each milestone was met and still nothing...
1st oil...
full production rates...
1st tanker...
1st million produced...
This is the time to get in when all the punters have had enough...
sentiment is the key and yes sentiment is not there...
currently trading at 21c... lets see what happens...
I used to say other things about PPP... now im saying, smart managment...
they have done everything by the book...
chao...
.^sc
even when Tui production hit, the share price did not take off for 7 months...
7 whole months...
each milestone was met and still nothing...
1st oil...
full production rates...
1st tanker...
1st million produced...
This is the time to get in when all the punters have had enough...
sentiment is the key and yes sentiment is not there...
currently trading at 21c... lets see what happens...
I used to say other things about PPP... now im saying, smart managment...
they have done everything by the book...
chao...
.^sc
