I did some crude, and admittedly naive calculations on how much I thought SHG might be worth. Very very crude, so feel free to flesh it out to more specifics if you wish. I’m not invested in SHG, so I’m not taking much trouble to do good sums. I’m not going to pour over estimated future production volumes. Notwithstanding that …
Forecast earnings for 2013 for SHG is 0.93pps. Maybe a PE of 5 might be reasonable (PAF – Pan African Resources – is on 8, and that’s a huge outfit). Given shares in issue of about 318m, that makes SHG worth about £15m (0.93*318*5) BEFORE the rights issue. SHG has a current market cap of £67m, so it’s suddenly looking way overvalued. Now, admittedly, that the EPS of SHG will presumably rise in 2014 and beyond, and I’m doing my calcs based on PEs rather than EVs – BUT – given that SHG needs to raise $30m (and some people are estimating ultimately much higher), the shares in SHG look distinctly overvalued, despite the fall of 17% today.
Very risky, and I think that current investors may be anchoring on recent prices, without necessarily realising that the shares might be severely overvalued.
Not trying to deramp, just saying.
Mark Carter's blog 