The stock market has not been kind the past few weeks. In fact it has been disastrous. Most retail players and investors must have seen their portfolio shrunk significantly during this period. 2^nd and 3^rd liner counters were battered - blue and black, with blood splattered for good measure.

While stocks are looking cheap and value has emerged in every nook and corner, it is pertinent to question what is the basis for this said ‘value’. Is it in comparison to the stock’s high price? Is it because the P/E ratio of the stock has fallen significantly? Or does the current low stock price simply does not make sense to you? These are certainly reasonable claims but it is also vital that the fundamentals of the company be re-assessed against the current economic conditions and factors affecting the financials of the company. Such underlying aspects may have moved from its peak hence resulting in the stock price downward movement.

Here, I am going to take a look at ‘value’ from another perspective. And specifically in respect to Seacera Group of Companies (Bursa: 7073). What is the company’s salvage value if the company is taken over, privatised and stripped naked. The figures in the table below was extracted from the company's latest quarterly announcement i.e. for the financial quarter ended 30 June 2018.

Look at the above figures broken down in an easily digestible manner. There is no prediction of future earnings involved. There is no manipulation of P/E ratio involved. It is simply the salvage value you will get when you tear the company into pieces. RM1.95 per share vs RM1.54 per share vs RM1.14 per share. Choose any of these 3 figures or one of your own if you would like to apply your own salvage value, and compare against Seacera's current trading price. At market close of 29 October 2018, the stocks of Seacera were trading at 20.5 sen.

On Monday 29 October 2018, the Board of Directors of Seacera announced (in respond to Bursa’s query) that all is well with the company and the reason for the company’s drastic stock price fall is due to financial problems faced by its 3 major shareholders. As worded in the announcement:

“… the three (3) major shareholders... have been forced to sell down their stakes in the Company on the market by the banks/stock broking firms.”

So what we have here is a situation where the company is fine and dandy but the personal financial positions of its major shareholders of the company have artificially brought the market value of the company down to unreasonable levels. The announcement made was also an open admittance that the 3 major shareholders do not have the financial cloud to resist or fight any takeover of Seacera. This must have grabbed the attention of big market players looking for a corporate exercise, or sharp eyed investors looking for a big kill, or corporate raiders looking to further fatten their wallets.

Speaking of corporate raiders. It is not easy being a corporate raider as there are plenty of risks involved. Corporate exercises are taken based on estimates (and gut feel) and miscalculations result in losses of cold hard cash. It is also a tedious exercise requiring a sizeable sum of fund and lots of man-hour. And that’s before opportunity cost is factored in. With such conditions, it is no wonder that corporate raiders are very sharp sharks who smell blood at the first droplet.

Do you think they are circling Seacera already?