Some posters are posting stupid valuations with no foundations....

Some posters are posting stupid valuations with no foundations. Therefore I am reposting the message I posted 19 June 09 on the valuation of AIO. I have made some changes due to the update since June.

"I am trying to value the current SP of AIO based on past capitalisation.

Before the chrisis AIO had 698 million shares at $10 per share with a capitalisation of 7 billion.

After the new issue the 2651 million shares at 2.64 per share gives a capitalisation of 7 billion.

Therefore based on market capitalisation the price should be around 2.64 per share.

However the $10 share price was at the height of the boom. So even if you take a capitalisation of 5 billion instead of 7 billion, the 2651 million shares at 1.89 per share will give you 5 billion capitalisation. Please note that I have reduced the capitalisation by 2 billion from the height.

You also need to take into account the fact that AIO will not be paying interest on 2 billion worth of loans which means a saving of 200 million per annum if interest rate is taken at 10%. There is also the fact that the company is now better capitalised with low debt and liquidation risk has gone. I believe that AIO may consder buying some other assets such as Queensland rail.

The current price is a bargain and institutions have realised this. I predict AIO will be $2 by the end of September.

AIO is not desparate for cash as apparent from the return of the excess SPP subscriptions.

The recession is over. Strong growth follows a recession/war. Look how Germany grew after WW2.

Also I believe, some0ne is buying big time. There are strong rumours of an imminent takeover and this time Mark R cannot block it. Today's volume of 43 million was one of the highest this year despite the higher price. The run has just begun. Such high turnover can only occur when someone is accumulating heaps. Even the Australian reported this. The run has been good from 1.30 a month ago to 1.73. Next stop $2."

Goodluck all holders.