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24-04-2012, 12:07 PM
Oxley is grossly overvalued. Selling at 5 times book value now, naive investors are thinking that it can maintain its growth rate of 20-30% for the next 10 years.
Let's assume all its projects are all fully sold NOW, CONSTRUCTION ALSO COMPLETED, SALES PROCEEDS COLLECTED IN CASH TODAY, achieving a net profit margin of 200% (construction cost, tax, marketing all accounted for), its current NAV per share will grow from 8.96 cents (as of 31 dec 2011) to around 27 cents, We can even assume that all 27 cents is cash.
Think about it, with 27 cents in cash, the company has to repurchase land, attempt to market and sell the new properties, basically repeating what other property developers are doing. but you have paid 40 cents for this company at today's price, does it make business sense?
You may want to tell me that it has a unique business model. If it is really so, wont other property developers attempt to replicate this "unique business model"?
Haha if oxley can really earn a total of 20 cents per share in the next 5 years, i swear i will just invest in ETFs for the rest of my life and not touch any individual stock.
(As much as this is a free market, overvalued companies should really not be given the chance to be listed. i pity my dad who has the impression that all companies that are allowed to list are all of investment grade.)
Let's assume all its projects are all fully sold NOW, CONSTRUCTION ALSO COMPLETED, SALES PROCEEDS COLLECTED IN CASH TODAY, achieving a net profit margin of 200% (construction cost, tax, marketing all accounted for), its current NAV per share will grow from 8.96 cents (as of 31 dec 2011) to around 27 cents, We can even assume that all 27 cents is cash.
Think about it, with 27 cents in cash, the company has to repurchase land, attempt to market and sell the new properties, basically repeating what other property developers are doing. but you have paid 40 cents for this company at today's price, does it make business sense?
You may want to tell me that it has a unique business model. If it is really so, wont other property developers attempt to replicate this "unique business model"?
Haha if oxley can really earn a total of 20 cents per share in the next 5 years, i swear i will just invest in ETFs for the rest of my life and not touch any individual stock.
(As much as this is a free market, overvalued companies should really not be given the chance to be listed. i pity my dad who has the impression that all companies that are allowed to list are all of investment grade.)