Someone asked what the current value of GGP shares should be, and asked for the mathematical build-up, the supporting justification for it, so here is why I think it is worth $32.54/share (you can argue different points, but here is MY rationale):
According to the news release about the emergence from bankruptcy:
$29.5B in assets
$27.3B in debt
$2.2B straight book value (not including strategic value, etc.)
Divide that $2.2B by the 312.36M shares and you get a book value of $7.04/share
http://finance.yahoo.com/q/ks?s=GGWPQ.PK (for the share count)
Look at EPS estimates for this current year, and analysts consensus estimate is $0.85/share. Assign to that EPS a P/E ratio of 30 (and we can argue that multiplier separately), provides a $25.50/share value.
Add the $25.50/share to the $7.04/share book value = $32.54/share.
So, from here, we can play games with the numbers. If you want to only assign a P/E multiplier of 15 to the EPS of $0.85/share, then the numbers drop to $12.75/share+$7.04book = $19.79/share (pessimistically).
However, looking forward, the EPS will likely be over $1.20/share for 2010 based on the debt restructuring and current booking/renewal of clients. That $1.20/share * 30 P/E multiplier = $36.00/share + $7.04/share = $43.04/share (optimistically).
The consensus estimates for 2010 do not take into account many of the variables that have been updated in the past 2 months, which is why I belive it is much more likely to be in the range of $1.20/share (well, I calculate $1.10-$1.40, and went conservatively to $1.20/share).
There are many variables we can tweak to come to any valuation we want, but every time I look at this stock, it looks like it is worth significantly more than the $6.xx/share it is trading at currently.
-- OK -- so you can beat me up from here on - I'm ready for ya!
I doesn't matter how many times you bump it. We all know it is not realistic at all. I agree the book value is $7 the 16 billion secured debt and the huge dilution from unsecured debt will keep the price and SPG's bid under $10.
Still not bad. That is why I bought another 1500 shares in addition to the 40,000 shares I bought at $3
Everybody just calm down and take your profit before the duck fly away ...
Another thing to consider is that the financing agreement may have some clause in there about a pending buyout by Simon properties (or other similar) that could sweeten the deal for lenders.