How to find undervalued shares listed in investment trust sector. By searching this forum I found many poeple recommended CINV and GUAR are good counters. Before going to in to this sector I would like to study more in detail. If it is other sectors than investment trust, we used to get the EPS from past interim reports and calcuate PE ratio based on the current market price. If PE ratio is below than the sector PE ratio then we can come to a decision that is is an undervalued share.
By searching this forum I found we should not look at the EPS for investment trust sector but we should look at NVPS which reflect the investments they have done. Guys, please explain me how these companies get revenue. Is it after disposing the investments they have currently or by re-evaluating the current investments or both. For example I have taken CINV (it's very popular among many investors)
This data is based on interim report as of 31 December, 2010
http://www.cse.lk/cmt/upload_report_file/608_1297679722156.pdf
Revenue - 355,107
Carrying value of investments disposed - (359,434)
Mark to market value adjustment - (54,225)
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Profit on portfolio activities - ( 58,552)
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(All figures in Sri Lankan Rupees '000)
By looking at above example
1. Company has disposed some investment on loss.
2. Market value adjusted to negative figure. (This may due market was down in december period due to credit clearance)
3. Market adjustment should be positive in this quarter due ASI has appreciated from 6600 to 7200 level by 31st of March 2011.
Your valuable advice is highly appreciated.
Thanks