Investment companies’ shares at EUR 255 mln discount
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Elma Holdings (ELMA) has become the best performing investment holding company in the first quarter of 2007, racking up a spectacular 68% return on its net asset value (NAV), but its stock price on the CSE continues to trade at a wide discount to NAV, similar to many other large
The Financial Mirror estimates the discount between the NAV and CSE traded prices of all investment companies as at April 2007 at EUR 255.5 mln, which confirms the gross under-valuation of many investment companies that have also recently started paying lofty dividends.
Elma, the second largest investment group in terms of assets behind Demetra, boosted its assets by EUR 9.6 mln to EUR 111 mln by April 5, while in percentage terms, its NAV rocketed by 68% to EUR 0.32 from EUR 0.19 at the end of December 2006.
A significant boost for Elma and related group investment companies like Dodonis, Jupiter and Stario came from the sale of a combined 20% stake in Aristo Developers (ARD) to Dolphin Capital, in one of the largest takeover deals of the first quarter, which allowed the Elma Group to book a combined CYP 16-18 mln in profits and receive about CYP 30 mln or EUR 50 mln in cash.
The second best performer in terms of increase in NAV was Confine, up 26%, followed by Jupiter, Dodonis and Leda Investments, itself the subject of a takeover bid.
Interfund, the third largest fund, increased assets by EUR 5.9 mln to EUR 84.4 mln, and its NAV by 3.5% to EUR 0.5049, while Athena became the fourth largest fund with total assets of EUR 74 mln, having boosted its NAV by 1.6% to EUR 0.7017. Athena is the subject of a takeover bid by both Hellenic Bank and SFS Group.
Cytrustees, itself the subject of a takeover bid by Bank of Cyprus and Marfin Popular Bank’s Laiki Investment Pcl was the fifth largest fund, having lifted assets by EUR 4.8 mln to EUR 64.5 mln and its NAV by 5.4% to EUR 2.8219.
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Wide discount factor
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However, the increased bid interest on several investment companies and recent buying originating from investors seeking undervalued stocks on the CSE, has failed to close the gap between the NAV and traded value of most investment companies.
The Financial Mirror found that the difference between the NAV of the
The under-performance of the sector is also confirmed by looking at the performance of the sub-sector to the other CSE sectors. Since the beginning of the year, the CSE Index (
The same analysis is found by the performance of the individual stocks.
The best performer of the quarter, Elma, continues to trade at a 31% discount to NAV as at April 23, when the Financial Mirror survey was conducted, since even though the stock is at its all-time high of EUR 0.22, it is still lower than its NAV of EUR 0.32.
Demetra, the largest and most liquid fund now diversifying into real estate and other investments, trades at a 31% discount, while Apollo, the eighth largest fund trades at a 18% discount.
Aiantas appears to be the most undervalued investment company on the CSE, at least on paper, considering the 65% discount of the NAV to the CSE traded price, but that may be explained by the portfolio mix, lack of cash and many non-listed investments.
The most over-valued investment company is by far Leda Investments, trading at a whopping 213% premium to its NAV, which may be due to the company have been successfully acquired by the Aspis Group, which wants to turn it into a real estate holding company.
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Dividends
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The huge discount is not justified considering that at least 11 companies out of 23 have declared dividends for 2006 after delivering combined profits of EUR 250 mln for last year.
DEM, APOL, ATH, CYTR, DOD, EXIN, INF, STAR, TINC, UNI and LAS are some of the investment companies that by April 23 had declared the intention to pay a dividend for 2006.
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