Eastern Holdings released a very spectacular set of results on 13 Nov 2007.
It registered multi-fold gains of 254% in revenue and 448% in profit, which resulted in its PE dropping down to just 2.8x based on its closing price on 14 Nov 2007 of $0.36. (the closing price today 22 Jan 2008 is $0.16)
If we were to peg it to its historical 12x PE, Eastern should theoretically trade at $1.56.
Nevertheless, the market is probably discounting the fact that property market is at its all time high thus its earnings growth may be unsustainable.
I think it is safe to say that Eatern will have very little price downside from here.It also continued its policy of paying good dividends, paying an interim dividend of $0.01 per share.On top of that, it is also proposing a bonus issue of 100,000,000 new ordinary shares on the basis of one (1) Bonus Share for every two (2) existing ordinary share in the capital of the Company held by the shareholders of the Company.
This means that investors who had picked up this stock when I first mentioned it in December 2006, will now have 3 shares for every 1 share they bought back then.
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