Whether performed by Algo's, HFT, or whatever other toys are out there.... IMHO, here is the reason why the share price is being "kept in check" (ie - below .30c) until the inevitable take over offer arrives in the mail...
The "Expert's valuation Report". And, what does the legislation say about how to value a company?....
667C Valuation of securities (1) To determine what is fair value for securities for the purposes of this Chapter: (a) first, assess the value of the company as a whole; and (b) then allocate that value among the classes of issued securities in the company (taking into account the relative financial risk, and voting and distribution rights, of the classes); and (c) then allocate the value of each class pro rata among the securities in that class (without allowing a premium or applying a discount for particular securities in that class).
(2) Without limiting subsection (1), in determining what is fair value for securities for the purposes of this Chapter, the consideration (if any) paid for securities in that class within the previous 6 months must be taken into account.
I'll be interested to see what form of Valuation the "Expert" takes. Will they take the "Asset Based" approach - straight off the Balance Sheet ($23.5m or a SP of .14c)?
Or, would they simply take the Market Cap (currently a SP of .25c)? After all, this would make the current share price look like chump change wouldn't it? In so doing, it would justify the Expert by satisfying clause (2) above.
Or, given we are not yet trading, would they take into account the financial benefits (EBITDA) that the eventual de-risked Panda Hill promises as consistently announced in Cradle's NPV model? I believe this is called the "Discounted Cash Flow Method" of valuation.
Personally, and without being self serving, I think the DCF method is appropriate - but I am quite concerned about the link between the current "railway lined" share price and Clause (2) above. Don't underestimate it.
