HiI feel like I'm also missing something. The discount of ABP to...

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17/07/23

10:50

Post #: 68819412
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Originally posted by eshaitan: ↑

Hi Alf2 on your second point I think it is down to dilution.

Technically pre offer/raise there should be 893 million shares in both companies going by the shares in issue in abacus at the moment. But ASK post equity raise and issuance of shares to ABP on acceptance of proposal will then total over 1.3 billion shares. Financial wizardry to give abacus its 20% stake and equity raise to predominantly pay inter company loans dilutes the shares and dividend by circa 2.5-3p I think for ASK giving just 6p. Also there would now be higher running costs by splitting the group which impacts profitability a little.

As for the first point it doesn’t add up, especially if ASK keeps its value at 1.41 dollars. The discount to NAV is far too large especially with cash and stake in ASK.

it’s interesting that the share price has held up better than most the last couple of days. Either I’m completely wrong or this will start up trend higher closer to the split taking place or immediately after. The share price just looks wrong.

but after 2 days of owning these I’m over 1pc down already so would take everything I say with a large pinch of salt! Roll on next month.

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Originally posted by Alf2: ↑

eshaitan I think you are right with your numbers. The things I am trying to get my head around are:

1. Share price post split - I would have thought that ABP purchased at $2.60 pre split may have become ABP $1.40 and ASK $1.20 post split if they retained the average discount to NTA. However, buyers have taken up the offer at $1.41? It could mean that the AGP portion after split is a greater discount (maybe due to office assets) however the discount on ABP would be huge to get ASK up to $1.40!

2. Yields - My understanding is that in the 2024 year ABP will pay around 8.5c and ASK around 6c. These are not huge yields and the total at 14.5c is below the current distributions of around 18c. This can't all be due to the ASK dilution can it?

Any thoughts?

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Hi

I feel like I'm also missing something. The discount of ABP to NTA would be massive once the demerger occurs. However based on distributions of 8.5c, the yield will be 6.8% if the market recognises no uplift in market value of demerging. If ABP trades at NTA of 2.19, the yield is only 3.8% which seems awfully low. Therefore my conclusion appears that ABP may trade with a 20% discount to NTA (say 1.75) to match other office funds where expecting a revaluation down of office buildings.

ABP Price at posting: $2.71 Sentiment: Hold Disclosure: Held
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0 Great analysis

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