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SAMP to benefit from Union Bank of Colombo (UBC) listing
SAMP had 26.338 mn Union Bank of Colombo (UBC) shares as at 31st Dec 2010. (not sure if position has changed since then, but let's assume it has not)
Its cost of the UBC shares was Rs276 mn, but its Directors valuation is zero - possibly due to regulatory reasons.
But once UBC is quoted next week, the equation will change.
Even at UBC IPO price of Rs25/share, the investment is worth Rs658 mn - which can be shown as profit in form of an appreciation of market value, if the UBC stake is shown as dealing securities and not investment securities. At assumed Rs50/share, it would potentially result in a book profit of Rs1.3 bn.
For EPS impact, consider expected profit against current number of shares of 153 mn.
These gains are obviously non-recurring, but still should not be discounted out of hand.
But investors should ask if these gains are already priced in to SAMP share, as potential was clear the moment UBC IPO was announced.
- Raw data from SAMP 2010 Annual Report : page 220
SAMP had 26.338 mn Union Bank of Colombo (UBC) shares as at 31st Dec 2010. (not sure if position has changed since then, but let's assume it has not)
Its cost of the UBC shares was Rs276 mn, but its Directors valuation is zero - possibly due to regulatory reasons.
But once UBC is quoted next week, the equation will change.
Even at UBC IPO price of Rs25/share, the investment is worth Rs658 mn - which can be shown as profit in form of an appreciation of market value, if the UBC stake is shown as dealing securities and not investment securities. At assumed Rs50/share, it would potentially result in a book profit of Rs1.3 bn.
For EPS impact, consider expected profit against current number of shares of 153 mn.
These gains are obviously non-recurring, but still should not be discounted out of hand.
But investors should ask if these gains are already priced in to SAMP share, as potential was clear the moment UBC IPO was announced.
- Raw data from SAMP 2010 Annual Report : page 220
