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The Alchemist wrote:Chinwi wrote:malanp wrote:Last Qtr EPS 79 cents,
9 months EPS 1.84 (annual 2.50)
trading at 6 PER. 15/2.50
looks average company, problem is much uncertainty
the dark side is Short term investments 11b and 1% of its drop in value will erase half of annual profit.
EPS = History
To know about the future we have to do many kinds of explorations
Ha Ha well said Chinwi !
Let me be the first to congratulate you on your 1000 posts. well done and keep it up !
Talking about explorations, it is similiar to oil explorations. if we pretend each well is one quarter, then sometimes first three wells may seem dry, no ? but in 4th or 5th well, you may strike oil !
Not much time left to do seismic studies now !
Dreaming of a 5th quarter
In all seriousness the business model is driven by the difference between the repo and reverse repo. As a rough guide 65% of assets are in govt securities. 85% of this (i.e. 66%*85%) is in reverse repo.
But I'm still puzzled how they can play around with this for too long.
For example put 5b in overnight repo 10%
Borrow 4.5b by pledging the above - reverse repo. Use the 4.5b borrowed funds to buy more govt bonds.
Now pray that interest rates drop to 8%. The price increase in bonds should should settle debt and make a profit. As the RAMS report puts it, when the interest rates increase by 100bps (1%) the sh!t hits the fans.
Perhaps @Chinwi and @Alchemist could care to explain further
