I think you're something else, truly brilliant. You're trolling...

First 43 Last

Share
Profile

Follow
JoeGambler

1,236 Posts.

114

31/08/18

01:53

Post #: 35311421
Share

Originally posted by Dr.Who ↑

That is the point. Why is the market trading SGH in a price range that equates to a multiple of book around 3-4?

A comparison with SHJ is a perfect one to consider. Trading at, below, or near book value indicates the market cannot see meaningful growth. A growth stock might trade at a PE of 30 or more because the market sees earnings growing at an exponential rate. Similarly, a stock trading at a multiple of book indicates the market believes growth is around the corner ( relatively speaking).

The reason for my pointing this out is previous commentary on the subject of valuation clearly implied that it should trade in the range 30c to $1.10. I am just making it explicitly clear that valuation is equity value not market value. Many (most) stocks on the market are over valued if simply look at it from the view point of is the SP greater than equity value.

Generally speaking higher multiples, whether PE or Book, indidcate the market believes earnings will catch up with SP in the not too distant future.

I would agree that SGH is a strange one given its lopsided share registry and limited free float. Nevertheless it is what it is and those freely able to trade it price it as a growth stock - implied by its relatively high multiple of book value.

Growth stocks are volatile by nature. The story has to unfold for it to continue to warrant a higher multiple. So currently the market is clearly saying that SGH has better prospects (from today - not encumbered by the past) than SHJ. If the market has reason to change its mind the price would plummet - that is what happens when a company does not achieve its perceived potential.

Make no mistake though. The equity value often spoke of on this forum compared to the actual SP is not an indication of over-valued. It is an indication that the market sees potential.

Expand

I think you're something else, truly brilliant. You're trolling is wonderful.

Keep up the good work on this 'growth stock' .... wink wink.

SGH Price at posting: $3.15 Sentiment: Sell Disclosure: Not Held
3 Upvote

0 Great analysis

Reply

Top Stories

MIN

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

WC8

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

AXP

Tambourah chases gold veins and mineralisation extension with drilling

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

There are more pages in this discussion • 28 more messages in this thread...

First 43 Last

Add SGH (ASX) to my watchlist

I think you're something else, truly brilliant. You're trolling...

Top Stories

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

Tambourah chases gold veins and mineralisation extension with drilling

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

Featured News