31-08-2011, 06:51 PM
(31-08-2011, 10:50 AM)yyt Wrote: [ -> ]Since liquidity does seems to be relatively low, coupled with such a distribution in shareholdings, would you agree that the chance of revaluation of this counter upwards towards the NAV is going to be pretty slim?
I believe NGI's low liquidity is due to (1) the free-float shares are already mostly held by well-funded longer-term investors attracted by the quality aspects of the underlying gifts business and the large size of the reserve assets, as well as the year-after-year good dividends, and (2) the share price remains too low.
I guess nobody can predict with certainty what Mr Market would do to a grossly under-priced counter like NGI. Just for discussion, what would happen to the share price if NGI, without any prior indication, announces a special dividend of $0.10/share - which can be easily funded by the group's existing cash reserve of $13.0m, or proceeds from an en bloc sale of the 12 factory units at 50 Playfair Road?
This is what happened to San Teh - another grossly under-priced counter! - last Friday (26Aug11). And what happened on Monday (29Aug11)? San Teh's share price shot up to an intra-day high of $0.69, from $0.39 which was the closing price on 26Aug11.
By the way, NGI closed up $0.015 (or 8.6%) at $0.19 today, with only 12 lots done. So it doesn't require much market capital to raise the price of a grossly under-priced stock!