what is ctx really worth?, page-2

Doctor,

First of all it would be interesting to hear how YOU value these shares?

Secondly, in a previous post I said it was "unlikely" CTX would produce a set of numbers in 2009 similar to last year. Clearly I was wrong, judging by the release yesterday. Looks like I'll have to be more patient than I thought for the good numbers that will change the current sentiment.

One way to value them is to divide the total shareholders equity (this is what's gone into the business from the owners, plus any retained profits, NOT the market capital, which is what they are valued by the sharemarket) by the number of shares on issue. That's $2,963,980,000 divided by 270,000,000 = $10.97 per share.

Thee last price yesterday was $8.64, so they're trading at 80% of total shareholder equity (or book value).

Compare this to other firms in the ASX200 and you can see why some people are saying Caltex are CHEAP. BHP trade at 460% of book value, Woodside Petroleum at 490%.

I find it hard to believe that the earning power of Caltex's 2.96 Billion Dollars of Assets is so depleted that they're not even worth the money that's been put into the business by the original owners, plus the retained earnings over the years.

From 2004 to 2007 the return on this 2.96B of shareholder equity was around 20 - 25% per year. Per share that's $2.20 to $2.70.

If they can get back to even 15%, that's $1.65 per share. On a 'normal' multiple of say 14, you're looking at a sharemarket value of well over $20.

Cause for a good deal of optimism I would have thought.