Undervalued Stock- Global Investment Limited and Recent Share Buy-Back Activities

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The share price of Global Investment Limited (“GIL”) has risen over 30% to S$0.136 per share since its lowest point on 7th December 2018 of S$0.103 per share. The main reason was due to the January 2019 market rally against the bear market sentiment that plagued the market during the last quarter of 2018. The other reason for the strong showing was due to the management of GIL exercising the share buy-back mandate. Ever since 8th January 2019, GIL has been pretty busy buying back shares almost daily. The last share buyback announcement was just as recent as 26 April 2019. 

Nevertheless, I am not entirely convinced by the effectiveness of the share buyback initiative given the significant difference to its fair value. GIL is still severely undervalued by the market. In the longer term, the share buyback is no use as a tool to prop up share price as the mandate for purchase has a limit imposed on it. Using a quick and dirty method to derive the valuation, we can use the NAV to approximate the fair value given that most of its assets are repriced to the market during the book closing. The fair value per share thus worked out to be around S$0.187 per share (S$322Mil of Net Assets over S$1,723 Mil number of ordinary shares). The current share price of S$0.136 per share is still at a very steep discount of 37.4% discount to the estimated fair value. 
The management of GIL should seriously conduct a strategic review as soon as possible and assess options such as selling off the entire company to other industry players such as banks, fund management companies or even government institutions (Temasek Holdings). This would then unlock the huge discount in its current languid share price. The market is apparently demanding a substantial risk premium for GIL over the meltdown of GIL during the previous Global Financial Crisis in 2008 that has scarred too many souls and did not re-price in the current restructured investment assets adequately.  
For now, the good thing is that GIL is paying out dividends and not hoarding excessive cash, unlike other companies. The Company’s mission statement is to invest in a socially responsible way to generate steady income and capital appreciation so as to deliver regular dividends and achieve capital growth for shareholders.

Note: Please refer to my other postings with regard to the assets held by GIL. 
1. Global Investment Limited- Financial review. Is it really a “Hidden Gem”?
2. Global Investment Limited- Excess cash from FY2017 deployed into China Domestic Bonds
3.Global Investment Limited (Attempt To Unlock Intrinsic Discounted Value)- Wiping off Accumulated Losses from the Global Financial Crisis

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