Comments on Company's Explaination

1. Thanks to Looney for the poster of "GTP...Company explains" (10/05/02 16:17), which is a valuable piece of information.

2. But I share the dispointment with Rorym
that we still can't find where the report is from.

3. Looney posted that statement on HC after the Friday market closing, but the GTP price reversal actually happened in Thursday with a huge volume turnover, and in Friday with a ~15% price jump. So again the information is extreamly leaky. - To a certain extent this reflects the quality of the GTP management.

4. It is surprising that GTP calls itself a "prospectus based company" (!!!) in the statement. But it is almost libellous to claim GUNNS Ltd (GNS) a same kind of "prospectus based company" as GTP. No, GNS only entered the prospectus business last year with a negligible part of its total revenue. This year GNS's establishment fee per acre for the prospectus woodlots is only about half of that of GTP (thanks to the articles in the recent 2 issues of Personal Investment magzine). So no way can GTP enjoy the similar p/e ratio as GNS.

5. I tried to work out mathmetically what the GTP price should be after DRP as follows.

Let its fair price before DRP announcement be P, and its price after be x. To conserve the total company value (capitalization), we have

[1 + $0.30/(x*90%)] * x = P

which gives

x = P - $0.33

So if P=$1, then x=$0.67, just as that given in the GTP statement. Note that P here refers to the price before the DRP news and before its leakage.

6. In balance I think GTP and other plantations prices are all undervalued, and the recent DRP is a positive move for the market confidence. But I don't know where is the figure of GTP's p/e=3 from. If we take $0.67 as its price, the earnings/share should be $0.22. But last year it only earned $0.16/share, which after DRP dilution should only be $0.11/s. This year's e/s, according to the forecast provided by Aspect Financial Pty Ltd on the CommSec and TD Waterhouse websites, should be lower than last years. - The misleading p/e figure in the statement also casts doubts on the quality of the GTP management.

7. The most decisive factor of the GTP price will be the amount of propectuses sold by the end of JUNE. Before that datam becoming available, the price will not be settled and just keep our fingures crossed.