Vale Int Share Discussion Threads

[rainmaker] 15/12/2006 13:07

I suppose a PEG is like a constant growth dividend discount model, in that at the extreme of valuation at the top end, throws up very high valuations because of it's sensitivity

regards

[rainmaker] 15/12/2006 12:55

Another way to value VIG is to use a PEG-growth from 1.17 to 1.84p is 57.26%. If the price is trading at 16p(it's easier if we assume that it April 07 and the results have been announced at 1.17P)then the peg would be 0.15. PE calculated by 16 divided by 1.84.But change the PEG to 1 (average for the market)then the share price would have to be £1.06

regards

[rainmaker] 15/12/2006 12:41

Re valuation-One way of looking at a price objective to take the highest prospective P/E that VIG traded at, in terms of multiples then apply it to the 2007 forecast-so before the last set of results were released VIG was trading at 12p and the forecast was 0.73p.ie 16.43. Since the 2005 results were announced it traded as high as 15.25 which with a forecast of 1.17p equates to 13.03.So we can look for a price objective of between 24p(1.84x13.03) and 30p(16.43x1.84) between now and April 2008-50% and 87.5%

regards

[rainmaker] 15/12/2006 12:32

Thanks Valhamos-Well put-no allowances for cost savings or various synergies or natural growth.

regards

[valhamos] 14/12/2006 17:53

Thanks Rainmaker. And as we discussed last week there's very little growth assumed in the 2007 forecast at 1.84p as most of the increase on 2006 is the recently announced Camtek acquisition.

[rainmaker] 14/12/2006 12:54

Screamingly cheap-forecasts for current year to 31 Dec 2006 unchanged at 1.17p and £0.87mln pre-tax but just released 2007 +56% at 1.84 eps and £1.21 pre-tax.BUY

regards

[rainmaker] 13/12/2006 00:25

Hi Des-When I posted my last message I suspected that PG may have added to his stake. It really makes sense to make further small purchases (about £50k) as he paid just 8p for some 7mln shares(approx £560k) so he has practically doubled his money already.

I think we are going to see more of the same until his stake reaches just under 30% putting a real squeeze on the MM, sending the price much higher.I think it would be a real waste for VIG Investors who recently bought at approx 10p to take some profits at current levels. I would be surprised to see any pullback-at any rate there is very little in the way of selling compared to the first few days after the acquisition was announced.We will see

regards

[deswalker] 12/12/2006 10:57

And another RNS. PG buys another 125k on 8/12/06. Now owns 20%.

[deswalker] 11/12/2006 17:53

RNS today. Two buys by PG (totalling 285k shares) made on 7/12/06. Both look to have been around the 15.5p level. He obviously sees value and now owns 19.7%.

[rainmaker] 08/12/2006 13:37

Two purchases today totalling some 200k shares probably 15 times average daily volume. Nothing in the IC but not too surprised. Expect much higher prices. Interested in Broker forecasts.

regards

[pugugly] 07/12/2006 16:14

Mush higher volume than usual but looks as though some profit taking.

[rainmaker] 07/12/2006 12:30

Hi All-It's going to be interesting to see what the IC have to say tomorrow. Expect positive comment but they have the infinite capacity to disappoint. Will also have a look at Shares Magazine also whose coverage of smaller "Value" Companies is better

regards

[deswalker] 07/12/2006 12:19

Half way to its correct value IMO

[valhamos] 06/12/2006 13:37

Rainmaker - Tempting though it is to add more, VIG is now 10% of my portfolio, at which level I do not buy any more but hold until the story changes.

Erogenous Jones - Difficult to do especially with the spread and Rainmaker suggesting 20p in a few weeks. Actually there is some buying at these levels and the rise seems to have more legs than the last spike last month.

[rainmaker] 06/12/2006 12:22

Hi Valhamos-Apologies,I've checked and you're right, the £300k profits for Camtek is pre-tax so there needs to be tax charge but then there are undoubted growth-look at the 16 consecutive years of growth in turnover,mostly organic and cost savings.

As regards the share price responding, we're seeing that right now and I expect the share price to reach 20p+ in the next few weeks. I feel the specialist Stock market publications will pick up on VIG, since it's unvaluation is so obvious that it can't really be missed.So in answer to your last question, it is still worth adding to your position at current levels although my personal style is not to pyramid

I suppose Adam & Harvey Group would have to be the most undervalued "Value Company" of the last twenty five years that I have personally come across where you could buy the Company's "net cash" for something like 50 pence in the pound and get a business with a whole load of Steel(internationally traded witha market value)and Property for absolutely nothing would have to be the most unvalued but VIG comes fairly close

regards

[valhamos] 06/12/2006 10:45

Rainmaker - Looking at next year's earnings I agree it does look incredibly undervalued. I haven't done the numbers in any detail but I have 1.75p rather than your 2p - for the impact of Camtek I've applied a tax charge to the £300k pre-tax profit for 2005 and assumed in calculating the interest charge that the Fortis loan would be repaid over 12 months. But the the difference is not material.

The issue is that at a share price of 14p we are on an historic P/E of 14 based on the 2005 IFRS restated profit after tax of £373k. However it is worse because the financial sites are still using the UKGAAP numbers (£154k loss). You rightly highlight the lack of coverage for small companies and as we move to a current year P/E of around 10 and a conservative no-growth prospective P/E of 8 the question is at what point the share price responds. Absent any major press coverage it may not be until the next results, especially as VIG has not shown such Eps growth before.

In the meantime I'm very happy with the 30% gain on my purchases during this year. Are you still adding as you consider this to be the best opportunity in 25 years. Do you impose risk constraints on how much you invest in one company?

[rainmaker] 05/12/2006 12:27

This Company's severe undervaluation is absolutely staggering!!Very conservatively if we assume no growth then it will make 2p in earnings for next year putting VIG on a prospective p/e of just 6!!!In twenty five years of investing in Stock markets I've never come across anything like it!

I'm going to be absolutely amazed if the share price fails to make further progress from current levels in the next week or so!

Someone questioned why VIG undervaluation has persisted and I think it is a combination of factors...the small company or size effect as Smaller Cos aren't followed by Institutions so Brokers don't cover them and more particularly in VIG's case IMHO the inadequate coverage by the House Broker and magazines such as the IC. In the latter VIG's balance sheet strength in that they had £1.5mln "net cash" and were actively persuing earnings enhancing acquisitions as reported in their accounts was a big plus but along with other "bull" points was omitted

Anyway I think there are Investors reading our posts who will act and make money


regards

[rainmaker] 05/12/2006 12:11

Valhamos-It looks very much like a Broker is executing a buy order

regards

[valhamos] 04/12/2006 18:47

That's a tough call. I think the price is on an upwards trend, but it is very illiquid and if there are a few sales (like today) there could be the pullback that you are looking for.

[rainmaker] 04/12/2006 13:04

Hi Bakunin-Expect both margin improvement and topline growth.Re margins look at the synergy created through the acquisition of Smirtware ie the first 9 months contribution and as regards increase in turnover look at the mostly organic rates of 16 years of consecutive increases

regards

[valhamos] 01/12/2006 23:39

Hi Bakunin - basically it is cheap because it is still perceived to be a low margin business. For the last few years profits have been static despite increases in turnover, in other words, margins had fallen. This decline appears to have started to reverse in 2005 and looks set to continue this year. Even so, for 2006 using your EBTA measure I'm only expecting 8% to 9% margins, but further improvements in 2007 are quite possible.

Have you had a look at the last few months posts? Both the reasons for it being lowly rated and the Italian tax situation have been covered. On the latter, as the business grows elsewhwere eg Far East & USA, Italy and the tax charge should decrease proportionally.