25/05/2015 06:48
The vast majority of the companies that trade in the CSE regulated market trade well below their net asset values, indicating investor disbelief in their prospects or in the true value of their assets.
Data processed and analysed by Stockwatch show that 84% of the fifty seven companies that belong in the regulated market and have announced final 2014 results, trade at prices below their respective net asset value.
The net asset value (NAV) of a company is the difference between its total assets minus its total liabilities and represents the net financial position of the company.
NAV, most commonly known as book value, essentially shows what would remain available to the shareholders of a company if it were to sell all its assets and pay all its obligations.
This is shown in the organization's balance sheet as shareholders' equity, and by dividing this figure by the number of shares outstanding, the NAV per share is derived.
The adjusted NAV is a figure calculated after subtracting the value of the intangible assets included in the company's balance sheet and is considered a more accurate measure of its position, albeit a stricter criterion, and this is what was used for the purposes of this analysis.
Under normal circumstances market forces push the actual valuations at levels above the respective NAVs as investors value the prospective benefits of their investment which are closely reflecting the company's prospects.
The more the prospects a company has in terms of achieving high profitability in the future as perceived by investors, the higher its market price will be.
The extraordinary conditions of the Cyprus economy with the ongoing negative consequences of the economic crisis still prevalent, act as a serious disincentive towards CSE companies current valuations.
Obviously investors are still considering investments in these companies as highly risky as the potential profitability appears to be not just rather limited but in most cases it is expected negative in which case NAVS will fall.
In addition, under the dismal currently prevailing conditions investors may consider the real value of a company's assets to be much lower than what it carries in its accounts especially the real estate related assets, due to the state this industry is for the time being.
This is particularly true for hotel-owning companies as traditionally their buildings constitute a large part of their total assets, as they are among the most highly discounted companies in respect to their NAV.
Price to adjusted NAV, although a closely monitored ratio by investors, is just one of many criteria that should be taken into consideration when making an investment decision.
The table ranks the companies that belong to the new main market according to their price to adjusted NAV ratio and denotes its ranking in the overall list of 57 companies which is attached at the end.
Investment companies are excluded from these tables as their valuation is not based on the same criteria, with NAV being by far the most important factor.
Four companies, PROP, MSV, PTL and SEAS have a negative adjusted NAV.
Data processed and analysed by Stockwatch show that 84% of the fifty seven companies that belong in the regulated market and have announced final 2014 results, trade at prices below their respective net asset value.
The net asset value (NAV) of a company is the difference between its total assets minus its total liabilities and represents the net financial position of the company.
NAV, most commonly known as book value, essentially shows what would remain available to the shareholders of a company if it were to sell all its assets and pay all its obligations.This is shown in the organization's balance sheet as shareholders' equity, and by dividing this figure by the number of shares outstanding, the NAV per share is derived.
The adjusted NAV is a figure calculated after subtracting the value of the intangible assets included in the company's balance sheet and is considered a more accurate measure of its position, albeit a stricter criterion, and this is what was used for the purposes of this analysis.
Under normal circumstances market forces push the actual valuations at levels above the respective NAVs as investors value the prospective benefits of their investment which are closely reflecting the company's prospects.
The more the prospects a company has in terms of achieving high profitability in the future as perceived by investors, the higher its market price will be.
The extraordinary conditions of the Cyprus economy with the ongoing negative consequences of the economic crisis still prevalent, act as a serious disincentive towards CSE companies current valuations.
Obviously investors are still considering investments in these companies as highly risky as the potential profitability appears to be not just rather limited but in most cases it is expected negative in which case NAVS will fall.
In addition, under the dismal currently prevailing conditions investors may consider the real value of a company's assets to be much lower than what it carries in its accounts especially the real estate related assets, due to the state this industry is for the time being.
This is particularly true for hotel-owning companies as traditionally their buildings constitute a large part of their total assets, as they are among the most highly discounted companies in respect to their NAV.
Price to adjusted NAV, although a closely monitored ratio by investors, is just one of many criteria that should be taken into consideration when making an investment decision.
The table ranks the companies that belong to the new main market according to their price to adjusted NAV ratio and denotes its ranking in the overall list of 57 companies which is attached at the end.
Investment companies are excluded from these tables as their valuation is not based on the same criteria, with NAV being by far the most important factor.
Four companies, PROP, MSV, PTL and SEAS have a negative adjusted NAV.
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