GTP 0.00% 12.0¢ great southern limited

what odds gtp t/o tim???????, page-7

  1. zwu
    2,425 Posts.
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    Hard to believe either of these companies could take over any other companies due to their own unfortunately low p/e ratios (let alone to take over each other).

    As a guide to the reasonable price of plantations in Australia, last year the North Plantation was sold to GNS by RIO at a p/e ratio of 10. GNS grapped the chance and got 2/3 of the money from bank loans and the remain 1/3 by issuing more shares. This year GNS e/s increased ~50% and price doubled.

    Now if the same opportunity came, I bet neither of GTP and TIM could grap it, because
    1) e/s would be diluted if a cheap company (with low p/e) buys a more expensive one (with higher p/e).
    2) frankly speaking, few banks would be willing to lend money to the "prospectus based business" (as GTP once called itself in a statement posted on this board last year).

    So I guess if any of these low p/e companies really has got money, the cheapest company they can buy should first be themselves. As we all know buyback can raise e/s and prop up price and then to make themself ready for acquisiting other companies.
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