HK282HK282 has requested the exchange to suspend trading in shares to annouce price sensitive information!  Ming Pao daily and many other sources have reported that the potential price sensitive information is that Next Media has finalized to sell its Taiwan publishing busines for HKD 4.64 bn.

 

This is equivalent to about HKD 1.92 per share!

 

From the previous post, we have noted that Mr. Lai Chee Ying holds 74.05% of Next Media.  On May 30th, 2008, HK282 traded at HKD 3.4 per share. 

 

So on that day, Mr Lai’s stake in Next Media translates to about HKD 6bn.  His stake as at Oct 25th 2012 is worth about 2bn.

 

So if you were to step into Mr. Lai’s shoes, would you sell your golden goose cheaply given that you own the majority stake to very profitable publishing businesses?

As per latest financial statements for March 2012 year end, HK282 earns about 43% revenues from its Taiwan operations, the remaining 57% translates to offshore profits at about HKD 342m (about 0.14 per share).

If factor in the HKD 1.92 per share sale of Taiwan business, plus valuing offshore profits using a 10 times multiple assuming zero growth, (This is a some what generous rough estimate, with has basis in CAPM from the HK282 returns stats page)

 

We get a value of HKD 3.32 per share!

 

That’s a potential 196% price increase from the Oct 15th HKD 1.12 per share closing!

And this time, I want to see how long it will take to reach this price without applying any discount.

 

– Mr. Alpha


Comments

comments

Powered by Facebook Comments