RE:RE:Q3 earning $0.08/share. Book $4.94m($0.44/share). Cash $3m. northmans wrote: Well you're missing a couple of things.
1. Most of their 'earnings' this year have come from an asset sale in the US.
2. Their affiliate company, "Colt Builders" has lost $500k so far this year of which their share is 20%
3. Their current share of Colt is valued at around $320k which will likely be reduced to zero.
4. They have an outstanding loan + interest payable to colt of $675,000 which given current oil price will likely get written off in bankruptcy.
5. The price discount is mostly an illiquidity premium as it's difficult to buy or sell this company without moving the price.
6. The discount is also highly related to the management team that has invested in risky, un-proven, non-arms length ventures that will all blow up in their face.
7. The underlying disposal business has been sitting at $450k NI for the last 5 or 6 years.
8. The management has granted themselves 1MM options, which as far as I can tell have yet to be exercised. If they ever decided to take some equity out expect the share price to crater.
So... there's what you're missing. I bought in at $0.05 and sold at $0.35. Company is fairly valued given the risks.
Thanks for the feedback. I agree that the "colt builders" is not looking good.
(1) The earning is indeed mainly from the sale of U.S investment. However, based on my calculation. Totally it had invested just around $1m on three projects($513K for MV property, $355K for RW Austin Property, $213k for RL property one). Given the distribution and the sale this year. It doesn't seems bad. Honestly I don't understand how the return is so high. But they doesn't seems fraud to me either.
(2) The 1M options priced at $0.11 has been there for a while. As far as I know, this is only one time thing(year 2012). I included it when calc the book value assuming they will be excercised.
(3) What is "$450k NI"?
Thanks