Forum Archive Index - December 2000

["G Stolwyk" <stolwyk@wave.co.nz>]

 

 

Peter,

 

Some time ago a top analyst 'did a job' on AIA. He predicted a PE of about 23.1 for the current year.

 As tourism has picked up since, I am predicting a somewhat higher profit; however, I will be using his PE and the $3.14 closing price.

 

I think that AIA is worth a PE of 25 and as six months of their business year have passed, I should be paying 25/23.1 * $3.14 = $ 3.40 per share!

 

Hugh Webber has already pointed out that Singapore was anxious to obtain a stake of only 5% and paid $2.90 some time ago.

 

One reason that the stock has not been able to achieve much higher prices, is the 420 mill. shares, the company has.

 I estimate that up to 80% are firmly held and that another 15% will only sell at more than $4.0. 

That still leaves say some 20 mill.shares in the hands of people willing to sell at between $3.15-$4.0.

 

I think that Singapore may want to increase their stake and that they will have to pay at least $4.50/share for a complete takeover! 

 

If we can keep the $NZ at current levels then there may be no reason to raise interest rates assuming that the demand stabilises.

 I think that dr Cullen will keep a firm grip on the money and that should be a plus for this stock and others eg. SKC.

 

However, I don't normally consider AIA as a stock for short term investment.

 

Gerry