So CPB has made an initial offering for CCI Holdings of 31cps.
But just on it's own profitability, what should this company be valued at?
The recent shareholder update indicates an expectation of 2.5cps in earnings for 05/06, and if we divide it into halves H1 was 1.1cps, and H2 will be 1.4cps. Typically there is no biasing towards earnings being greater in the first or second half, so we get an idea of the annual earnings growth rate occuring atm....0.3/1.1*2 = 54%.
So the expectation for 06/07 growth = 2.8cps*.54 = 1.5c. So EPS for 06/07 should be about 2.8+1.5 = 4.3cps.
Based on those estimates, at 31c, the stock is only trading at 7.2 times future 06/07 earnings......with the typical P/E ratio's for mining service companies being around 20 times earnings, CHL looks chronically undervalued when taking into consideration it's enormous earnings growth potential.......Makes you understand what CPB are trying to do, however the tightly held nature of the stock will work against them and make it difficult for them to steadily grow their holding......
It's in the interest of the board to see the shareprice move up steadily to protect against a predator like CPB, so an investment in CHL at present has a lot going for it.
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)