(i) Valuations usually begin by looking at the net assets, not...

(i) Valuations usually begin by looking at the net assets, not the gross assets i.e. we need to first subtract the liabilities from the total assets.

(ii) Assets aren't always what you think they are. Items in the balance sheet are shown on the basis of their accounting value and not necessarily their true economic value. For example, the value of inventory shown, at cost, may be somewhat in excess of the amount that could ever be realised; or the intangibles as shown, which is the premium PaperlinX paid for various businesses in the past over and above the tangible value of those business' assets, may well be significantly overstated where those businesses are not likely to generate a corresponding economic return.

For PaperlinX, both these items are not insignificant.

(iii) We also have to allow for off-balance sheet liabilities not shown.

(iv) Allowance now needs to be made for the PXUPA shareholders' component of the net tangible equity, which, after the above deductions, is now only a small fraction of the original $1b total assets. PXUPA equity far exceeds PPX equity.

(v) PaperlinX is still a very high risk situation. It's struggling; the dual shareholder structure is messy and constrictive of growth; and anything within or outside PaperlinX's control could affect its capacity to meet its debt covenants and cripple the company etc.

(vi) The company has fallen off the radar of the general investing community. Those who are potential investors have a memory, and "penny dreadful" status falls outside not a few investors' mandates!

I believe it's underpriced, maybe around 30% - but certainly not by the whopping 97% you've suggested.