valuation for dummies....
The rat feel like it is someone with more money consolidating SWT shares.
Consider that the first buy was for 500 000 shares, made up of 12 different smaller sellers.
The third buy was for 120k of shares, made up of 4 different smaller sellers.
In the end its the market that calls the shots, but from this its saying " small guys think its time to sell, larger guys think its time to buy".
This pattern has been ongoing, small sells, large buys.
We have been through all the maths many times. I think the easist way to explain it is that SWT is becomeing a company 18 times larger, by diluting its shares by 2/3.
Also consider this : IIN has a revenue of around $37 million in an industry and only provides ADSL and VOIP. It has a share market cap of $192 million!! at 2.41 a share.
People Telecom ( SWT) will have a revenue at least DOUBLE this, and if you believe their forecast, more than tripple this, yet at present is valued around $64 million once the extra shares come on. At the moment only valued at $18 million. Profit is the same.
So..does anyone think that a company 2-3 times the size of IIN, with same profit and better room for growth as they provide the full package, is worth only 1/4 the amount of IIN?
The truth is I think that the people that have bothered to work out the maths post merger can see it will have to be re-valued. Thats why the buy parcels are always so much bigger than the sells lately. People that dont bother going through the figures, the smaller punters are selling. If a financial journalist in the "West Australian" thinks there is a mistake because the shares are being diluted by 2/3, and seems to have no idea its a back listing for People Telecom, then that says a lot about the valuation ability of the modern punter.
The maths shouldnt be too complicated. Its disaappointint that the price has not risen before the merger, I would liek it to be up around 16 cents, but I have looked into it many ways, I know its real value, and like many stocks, I just have to wait for it to be rated to its fair value, anywhere between 18-33 cents post merger.
