SKP Resources Share Price Target Fair Value Research Analysis

Date: 
2012-08-06
Firm: 
TA
Stock: 
SKPRES
Price Target: 
0.54
Price Call: 
BUY
Last Price: 
1.09
Upside/Downside: 
-0.55 (50.46%)
Recommended buy by TA Securities, with SKP Resources Berhad share price target fair value of RM0.54. Let us look at the basic information by using the PEGGY Method and SKP Resources share price RM0.335:

PE: PE ratio is 9.8x (2012 March).

G: Growth 31% (2012 ' 2013 March), 0.5% (2014) and 18% (2015) Forecast by TA Securities.

G: Gearing, net cash

Y: Yield, SKP Resource dividend yield is 6%


Based on the above, the PE ratio is not very expensive. There is growth potential and the dividend yield also is good.

I have actually include the outstanding warrant SKPRES-WA of 180 million shares, so the PE Ratio is 9.8x. Without the diluted from SKP Resources Berhad warrants, the PE Ratio is 8.2x.

On Sunday 5 August 2012, after reading the report, I wanted to buy on Monday 6 August 2012. Then I did some SKPRes share price checking, and I realised that they have warrants. Upon further check, I realised that the SPK Resources research paper figures are not diluted by the warrant. Then I have some uneasy kind of feeling, felt being don't know what to say.

If you look at the figures, whether diluted by warrant or not, the difference is not so big. But what if the warrant outstanding is very huge? Although for SKP Resources the difference is not big, I decided not to buy because of don't know what kind of feeling.

I really hope in research paper, the figures to use are the diluted figures for prudent basis, or to have two EPS, one with diluted, the other without for references. Or to put a remark saying not diluted for warrant. For me, I prefer to use diluted PE ratio.


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Thanks
Discussions
1 person likes this. Showing 4 of 4 comments

1621

So is buy or not buy?

2012-08-09 14:18

juinming0304

buy 1621

2012-08-09 14:35

casual_investor

good buy

2012-08-10 17:35

Vincent Wong

Buy

2012-08-10 17:50

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