Which company would you buy and why?
HOTEL AND TRAVEL SECTOR TILE AND CERAMIC SECTOR
EXPORT SECTOR LAND AND PROPERTY SECTOR TELECOMMUNICATION SECTOR
TRADING SECTOR DIVERSIFIED HOLDINGS SECTOR
DDIALOG AXIATA PLC
HAYLEYS FABRIC PLC
HVA FOODS PLC
JOHN KEELLS HOLDINGS PLC Hot
JOHN KEELLS HOTELS PLC
LANKEM CEYLON PLC
LAUGFS GAS PLC
NATION LANKA FINANCE PLC
NESTLE LANKA PLC
PIRAMAL GLASS CEYLON PLC
ROYAL CERAMICS PLC
SOFTLOGIC LIFE INSURANCE PLC
SRI LANKA TELECOM PLC
TESS AGRO PLC
VALLIBEL ONE PLC Hot
@Sstar wrote:I will go for the higher EPS company. Higher NAV company may have non performing assets whereas higher EPS company may be utilizing the assets better than the higher NAV Company. After all Market vise, stocks are trading around 1.5 BV and 10X PER? Accordingly, Rs 1/= of NAV will have only Rs 1.50 effect on share price whereas Rs 1/= increase in Earning will have Rs 10/= impact on the share price.
As a shareholder, we are more interested in earnings, dividends and capital appreciation. Higher NAV company should give higher return if assets are better utilized. In your case higher NAV company seems to be inefficient organization. Revaluation of assets and resultant reevaluation reserves cannot be distributed whereas as profits can be distribued giving better capital appreciation to shareholders.
You may have to look at other qualitative assessment factors about the company before making the final decision. (Eg Management, goodwill etc). This way we could determine whether the high NAV company has the potential to utilize its assets better and make more ROA. If so taking a bet on high NAV company may not be a bad idea cause it has better future opportunities.
Permissions in this forum:
You cannot reply to topics in this forum