Forum Archive Index - November 2001

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

Since FPA is running up strongly today, maybe some investors begin to realize its underlying values. For what's worth, I thought I would put out some figures for chatters to ponder over. (Refer to my message on 3/11/01).

 

Upon the separation process, there are 66M of FPA shares issued. 

FPA now owns 20 millions of FPH shares.

 

So for the $18 of each FPH share, it worth's just under $6 per share to FPA shares.

At today's price of $9.5 for FPA, therefore the appliance business (plus its finance division) is valued currently at only $3.5 (9.5-6).

 

With the projected profit of $40M for the appliance business, the appliance business of FPA represents an earning of $0.6/per share (40/66), yielding a prospective P/E ratio of only 5.8 (3.5/0.6) !!.

 

IMHO, the FPA share price must appreciate further for at least another $3-4, just to bring its P/E ratio to a more respectable and conservative figure of 10-12. 

 

The strong run up of FPA share today may be reflecting its underlying value that has just been appreciated by some investors

 

Food for thought

 

Stephen