I read that the upcoming SMC offering has a new price range of P110 to P140 per share. Lower than the P150 per share before the trade suspension and much lower than its peak of about P180 per share. Comparing it with some back-of-napkin figures to similar diversified/diversifying conglomerates:
| Price | EPS | P/E | Return (E/P) | |
| SMC | 110 | 6.14 | 17.92 | 5.58% |
| SMC | 140 | 6.14 | 22.80 | 4.39% |
| SMC | 153 | 6.14 | 24.92 | 4.01% |
| SMC | 180 | 6.14 | 29.32 | 3.41% |
| AC | 17.01 | 5.88% | ||
| JGS (’09) | 19.28 | 5.19% | ||
| AGI (’09) | 23.77 | 4.21% | ||
| AEV (’09) | 26.97 | 3.71% | ||
| MPI | 27.03 | 3.70% |
JGS, AGI, and AEV will probably have a lower P/E and higher return for 2010 due to higher earnings. While MPI is just expensive at this point. In any case, this seems to show that the quoted price range imputes a significant risk premium. I can think of the ongoing SMC ownership issue. I guess if the government gets ownership, they can screw up profitability :P Anyway, it seems to me the premium is too high and results in a comparatively low/cheap price. Hmmmm, should I buy up?
UPDATE: Looks like everyone bought up. Shares got gobbled up before you can say “gook”. What do you expect? SMC is a well-established company with good management, profitable existing businesses, and forays into promising new businesses as part of its expansion and diversification. Wishing for a piece of that pie.