At the risk of challenging Sigma shareholders, I really cannot...

At the risk of challenging Sigma shareholders, I really cannot understand why Sigma is valued so much higher that API. The market cap of Sigma at $789.7m is more than six times that of API at $119.6m yet API has larger revenues than Sigma ($3.5 billion versus $2.9 billion in their last annual reports).

Sigma’s net assets at $676.8m are less than its market cap whereas API’s net assets of $546.3m are more than four and a half times its market cap.

API was recently thrown out of the ASX 300 and that has had a cascading effect on the share price as index funds flogged the shares to buy the stocks replacing it in the index. Sigma on the other hand is an ASX 200 stock and therefore gets much more index fund support.

The average annual earnings of SIP since 2003 according to COMSEC are 5.5 cents a share. Over the same period API had average annual earnings of 8.6 cents a share. Yet SIP sells for 67 cents and API sells for 24 cents. SIP's best earnings per share during this period was 11.2 cents in 2007. API's best earnings per share during this period were 15.3 cents in 2006. If API can get back to just its average earnings then it would be selling on a PE of under 3. SIP on the other hand is selling on a PE of 12.6 based on its average earnings during that time. Why is SIP selling at four times the PE of API in terms of historic returns?

The Sigma share price has risen 95 percent in the last six months whereas the API price has fallen 15 percent.

The net result in my view is that API is a much better buy right now than SIP. Can anyone here make a case for why this might not be so?

GPASAS