Forum Archive Index - April 2001

["SWLEE" <SWLEE@xtra.co.nz>]

Hi Nigel,

You are totally correct with your calculation. However, you need to consider other aspects of RBC in relation FFS share price.

 For example, you need to put some value on other assets of RBC which, on the book worth about $100M. Say, for argument, lets discount it by 50% to $50M. This equates to $0.14 per RBC share and with FFS share price at $0.31, RBC should be valued at 0.14+0.31*1.4=$0.57, as opposed to its current price of $0.43.

So, there is considerable upside to RBC share price even if FFS remains unchanged. 

 Cheers

 

----- Original Message -----

From: Nigel Wilson

To: sharechat@sharechat.co.nz

Sent: Thursday, April 05, 2001 10:12 AM

Subject: Re: Re: [sharechat] FFS and RBC

Okay, someone's gonna have to spell this out to me.  The figure of 1.4 has been calculated, and the statement made that for every 1 cent increase in FFS, RBC will increase 1.4 cents.  Am I reading that correctly?  If so... how does it work?!

FFS current price = 31 cents.  If this price doubles, eg a 31 cent increase, FFS will be priced at 62 cents, a 100% return.

Imagine I bought into RBC at 45 cents.  While FFS increases by 31 cents, RBC will have increased by 31x1.4=43 cents.  Its new price would be 88 cents, only a 95% gain - still great, but not as good as FFS alone.  Porobably  I am completely missing the point here, but I thought that the relative worths of each share would depend on the extent of improvement of FFS price, and of the performance (good or bad) of RBC's other assets.

Could someone please explain where I'm going wrong!! Why does everyone understand this except for me?!!!

 

Cheers,

Nigel.

---

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