The EV calc is based on assuming that the Goodwill LCI paid is bonafide and justifiable. The street believes this is not the case.The bought out Co. had its own EV and cash flow prior take over and they were very much lower than what it is now.
I do not know wahat the discounted acceptable value is.
No not quite.
Look at LCI before the acquisition. It had little debt ,, a good product portfolio and had a great price. It then made a paid by debt acquisition of a Co. with little cash flow. The street feels it overpaid. The result is that the NAV is now _-ve with no official sign when it will become +ve. The Investment world feels it overpaid The slide represents that overpayment as estimated by the street,
I still think LCI will rise from the ashes but I suspect there will be more pain in the days to come.
Good luck nevertheless.
in India, nepotism is still rampant. Big capital Loans are given to Big Buisness Cos. thru Govt. sponsors and these Cos routinely aim to default return of capital. IBN senior Mgm.t have been in bed with senior Govt. officials lured by national awards for service to the Nation.All this Capital Loss is from your earnings. Lending to small firms involve far more work and research. They are generally less prone to default.
The CEO and her Cronies deserve to be turfed out and replaced by a new CEO & set of experienced Loan Officers who specialize in Risk control mgmt. By lending to smaller firms they automatically reduce such losses which affects the Capital Account,
lonbut: You have it right. Interest rates are expected to climb and Cos with debt will see their P/b drop.
There is no Book value if the Intangibles are discounted .Hence the slide.
The net Assets w/o Intangibles is about $0.75bn while the Liabilities are over $1.0bn. Because of this the NAV w/o intangibles (No one can value) is -ve.
Hence theco is being heavily shorted by those who understand value.
The lost a key Customer after the acquisition and a few Product launches due 2nd half 2016 are delayed whilst restructuring costs are up. Their turn around date is 2017.
They face a big loss because of Consolidation cost with their acquisition. They expect 2 -3quarters of lossbefore the turn around. The pvt Hedge Funds who may have an inside track have been short since the aquisition. I expect it to stabilize around $12 or os. Most small -Meduim Cos see a low near 1/3rd the high.for that year.
Patience will be rewarded but timing is important when it come to small fry.
Phase 3 of the Alzeimer study is due 2016 . I expected Pvt Hedge fund to close out their positions but that has not happened as yet.
Do they have the inside track; I wonder.
No; Company restructure to cost +$30m over 3 years. Cash flow likely to be -ve during this time. I would recommend a BUY later in 2016/17.
No hurry; don't worry. I am in the same boat waiting for the Hedge Fund letter to their Pvt clients advising them to cover.
More room to run.!