Forum Archive Index - September 2000

["Richard Hooper" <hoop@ihug.co.nz>]

Hi All
I finally sold 75% of my BCH last week for$12.89 only to see it rise the
next day to 13.30 ........ Typical ... at least I can sleep at nights
knowing that I realised 49% profit and not having kittens everytime BCH dips
in price. I keep on having a bad gutfeel for this stock lately for the same
reasons outlined by both Peter & Brian . The good news for all BCH
shareholders is that everything I have sold lately has about turned and
increased in price.
Happy Hunting  :)))
Hoop
----- Original Message -----
From: "Peter Maiden" <pmaiden@today.com.au>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, September 12, 2000 12:22 PM
Subject: [sharechat] BCH - where have I gone wrong?


> I am looking for somebody (maybe a rich converted Baycorper) to tell me
where my thinking has gone wrong when I have decided on several occasions
not to buy into BCH. My rationale for making such decisions has been -
>
> Baycorp is a company I admire. Especially how it embraces technology to
extract immense value out the information it has built up over many years. I
also admire the approach it is taking in transporting a tested business
model to other parts of the world. I also  admire the recent growth in
earnings the company has achieved.
>
> Several times in the past I have considered adding BCH to my portfolio.
Each time I have been tempted I have decided not to purchase because of the
high PE ratio that prevailed at the time.
>
> However the price continues to climb, as does the PE
>
> If I had been a 'momentum' buyer  I too could have been taken along for a
profitable ride as many have done. Things like PE ratios don't come into the
decision making rationale.
>
> Again I have been tempted and again decided not to invest in BCH - because
of the high current PE.
>
> Last reported earnings  of $15.7M and 20.3 cents/share  (on revenues of
$58.5M)  gives a current PE of 65.  Prospects are reported to be "expected
20 per cent annual profit growth over the next three to five years". On
these future prospects one would expect earnings to reach $27M and 35
cents/share in three years.  At today's price that is sill a PE of  38. If
the price moves up  10% a year to say 1770 the PE would be 50.
>
> Whatever PE I use in making my decision whether to buy or not I am
uncomfortable with - especially when the current price already has built in
the future growth prospects.  In other words I consider the shares to be
overvalued with not much prospects of growth (in the share price that is.
There is a real chance of a falling share price if the market decides that
these shares should trade a a more respectable PE ratio.
>
> Maybe what I am missing is that the true value of the company is not it
future earnings stream but the value of its intellectual property, But then
would anybody pay more than a $1B ( BCH market cap) for the records and
processes they have.
>
> Look forward to hearing from anybody who could me right. After this
decision making process has caused lost opportunities
>
> Peter
>
>
>
>
> --- Move to a better address ---
>        + today freemail +
>     http://www.today.com.au
>
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