Chinese consortium wins bid for 40% stake in Pakistan Stock Exchange

[艹艹艹]

I have a problem not understand why Indians do not invest in Pakistan?
Why don't Indians boycott Chinese companies investing in India?

 

[DJ_Viper]

85 million for exchange is not alot should have been 5-10 Billion, a very low number by my estimates

Sir, you are nowhere near even $ 2 billion yet for your stock market's IPO. Hoping for $ 5-10 billion is pretty naive in my opinion. Your entire foreign reserves stand around $ 25 billion (for the entire country with 200 million people in it and industries, etc). How could it be that your stock market is 25% of that when your economy has just started to take off?

Also, at the price per share, 27-28 PKR, the present value would be around $ 260 million I'd guess? So $ 80 million makes sense.

May be around 2020, I could see Pakistan's stock market worth a $ 5-10 billion. The current market capitalization is around $ 72 billion but there are only like 600 total companies. This needs to change and more public offerings need to surface for your system's evaluation to go up (which really means your economy is going up). You can easily get $ 5 billion in a few years if significant increase takes place for more IPO's to take place (including the Tech sector as Pakistan has talent in that industry).

By putting in third party management, then it would end any illegal trading or inside trading like things happen in Pakistan. So the market would grow regardless.

 

[AZADPAKISTAN2009]

The sale should have had starting value of 5-10 Billion , however it is meaningless to debate that aspect, Chinese group won , and let us share the joy of congradulating the new partners

If PSX can go from 210 Million (Current market value) to be in Top 18 Stock exchanges of word which trade at around 1000 Billion - 2,000 Billion net worth then the 60% stake we have would certainly be a great deal done

Note 2 Chinese Stock Exchanges have value of

• 3,900 Billion (Shanghai Stock Exchange)
• 2,000 Billion (Shenzen Stock Exchange)

Ranking in Top 10 of world

If we can go from 210 Million to figure of 20 Billion or even 50 to 500 Billion by 2023
I say a great deal

To have chance to learn from Chinese experience of being in Top 10 of world globally , tremendous boost for Pak-China Stock Exchange (PCSX)

 

[mpk1988]

Wtf!!! A 40% stake for 85mn USD. This is a joke right??? Right??

Daylight robbery!!!

 

[maximuswarrior]

So our leaders are willing to sell entire Pakistan to China now?

@maximuswarrior

This is how we are supposed to function?

A fine example of when a nation looses its footing, identity and mindset.

Wow! You seem very concerned. Aren't they your leaders as well?

With Chinese cooperation, Pakistan is functioning pretty amazing. You been reading Pakistan's economic indicators through Western sources lately? That should give you an indication where Pakistan stands today as opposed to a few years ago when Pakistan was a US "ally" in the WoT.

Personally, I fully support and appreciate this move. Pakistan is a country that could have sold itself to the USA. In fact, partly it did during the WoT and even before that period. We saw the results. I, and millions of Pakistanis trust China. I know they won't kill our women and children in drone strikes unlike Uncle Sam. China won't pressure and accuse Pakistan to do more. China won't apply double standards.

China will apply caution and play by the rules. They will invest huge sums of money and also reap the benefits. Pakistan China ventures and cooperation is an absolute win win. We Pakistanis only talk. We can't get things done. China has a reputation of getting things done. I would outsource much of the vital projects to China. That's my personal opinion. China will show results and that is all that matters. No need for you to dramatize though.

Pakistan should do China a favor: become its province.

Why bother with such formalities?

You seem to be in an awful lot of pain.

Aren't you the same guy who applauds Pakistani cooperation with the USA in every other thread? It is okay if Pakistan sells itself to the USA, but it is an unimaginable prospect if Pakistan cooperates with China. We get the duplicity.

Please stop throwing fits. You haven't even seen half of it yet. Pakistan and China are going to cooperate on almost every level. You are just starting to see a few glimpses here and there. I would suggest you to get used to this idea. There is much much more on its way.

The sale should have had starting value of 5-10 Billion , however it is meaningless to debate that aspect, Chinese group won , and let us share the joy of congradulating the new partners

If PSX can go from 210 Million (Current market value) to be in Top 18 Stock exchanges of word which trade at around 1000 Billion - 2,000 Billion net worth then the 60% stake we have would certainly be a great deal done

Note 2 Chinese Stock Exchanges have value of

• 3,900 Billion (Shanghai Stock Exchange)
• 2,000 Billion (Shenzen Stock Exchange)

Ranking in Top 10 of world

If we can go from 210 Million to figure of 20 Billion or even 50 to 500 Billion by 2023
I say a great deal

To have chance to learn from Chinese experience of being in Top 10 of world globally , tremendous boost for Pak-China Stock Exchange (PCSX)

We are going to win with China on our side. That's just the way it is. This is a very smart move. The China factor is going to have a very positive effect on our stock market. It is a sign of immense confidence when someone buys so much stake in any given stock market.

 

[dadeechi]

But why they sold in a very very cheap price !

$84 million dollar really !!!!

China is planning to invest more than $200 Billion in Pakistan and there would many many Chinese companies that would be setting up shop in Pakistan and listed on the exchange. If you look at that big picture, this sale/transaction value is irrelevant.

 

[Reichsmarschall]

I have a problem not understand why Indians do not invest in Pakistan?
Why don't Indians boycott Chinese companies investing in India?

becuase they are genetically butthurt

 

[Shotgunner51]

At that time, I could go, and ask for 2-3 times the evaluation. So if at that time its evaluation comes at $ 100 million (just an example), you could ask for $ 300 million and may be get over $ 250 million.

Now if you increase numbers, $ 3 billion evaluation means you could ask for $ 9 billion and get around $ 8 or so. Not sure why they did it now. May be they wanted to modernize it and bring in a more mature system for growth? That would be the only thing that would make sense.

Wrong. You don't "ask for $ 9 billion and get around $ 8 or so" when you "$3 billion evaluation", no such thing.

• If a company's pre-money valuation is $3B and issue new shares worth $1B, then post-money valuation of the company is $4B. Existing shareholders diluted to 75%, subscribers pay $1B get 25%, company gets $10 enriching its capital.
• If a company's valuation is $3B, existing shareholders sell old shares worth $1B, no change in company's book valuation. Existing shareholders cash-in $1B and their shareholding in the company diluted to 66.67%, buyers pay $1B get 33.33%.
• Is there a universal formula for private company evaluation? No. A company in reds, in debts, can also gets positive valuation, as long as the subscriber/buyer agrees to it.

On topic, from what I read it's a new share placement by PSX to strategic investors, raising $85 million (40% of diluted share base) of new money, post-money book valuation $213 million, or pre-money valuation $128 million.

• What is strategic investor? An investor that brings strategic value adds other than financial input.
• What are strategic value adds? Management, technological know-how, industry credential, market confidence, new customers, new transactions, financial backup ..... the list goes on, it's entirely upto the company to decide.
  
• Is the valuation fair? How would I know until I have full access to this private company's books and done my due diligence? But I know the process is described as bidding (I would prefer the term "competitive negotiation") which would involve disclosure to interested parties, who for sure will do their DD.
• So how many bidders participated in the process? At least 17, all consortia/groups/corporations, all have financial experience.
• Is the winning consortium Chinese? No, it comprises of both Chinese and Pakistani entities.

http://newsweekpakistan.com/chinese-consortium-wins-40-stake-in-psx/
http://www.pakistantoday.com.pk/blog/2016/12/23/bullish-boost-for-psx/

 

[DJ_Viper]

Wrong. You don't "ask for $ 9 billion and get around $ 8 or so" when you "$3 billion evaluation", no such thing.

• If a company's pre-money valuation is $3B and issue new shares worth $1B, then post-money valuation of the company is $4B. Existing shareholders diluted to 75%, subscribers pay $1B get 25%, company gets $10 enriching its capital.
• If a company's valuation is $3B, existing shareholders sell old shares worth $1B, no change in company's book valuation. Existing shareholders cash-in $1B and their shareholding in the company diluted to 66.67%, buyers pay $1B get 33.33%.
• Is there a universal formula for private company evaluation? No. A company in reds, in debts, can also gets positive valuation, as long as the subscriber/buyer agrees to it.

On topic, from what I read it's a new share placement by PSX to strategic investors, raising $85 million (40% of diluted share base) of new money, post-money book valuation $213 million, or pre-money valuation $128 million.

• What is strategic investor? An investor that brings strategic value adds other than financial input.
• What are strategic value adds? Management, technological know-how, industry credential, market confidence, new customers, new transactions, financial backup ..... the list goes on, it's entirely upto the company to decide.
  
• Is the valuation fair? How would I know until I have full access to this private company's books and done my due diligence? But I know the process is described as bidding (I would prefer the term "competitive negotiation") which would involve disclosure to interested parties, who for sure will do their DD.
• So how many bidders participated in the process? At least 17, all consortia/groups/corporations, all have financial experience.
• Is the winning consortium Chinese? No, it comprises of both Chinese and Pakistani entities.

http://newsweekpakistan.com/chinese-consortium-wins-40-stake-in-psx/
http://www.pakistantoday.com.pk/blog/2016/12/23/bullish-boost-for-psx/

That's it? May want to credential yourself how did you learn about these "details". Do you have any real experience in working as a Market Professional? Ever took a company public, or were a part of a global M&A where the stock prices are determined, etc, etc? Or may be this is how it happens in China because the rest of the world follows a different process! Every heard of EPS, DPS, EM? Some of these are provided below for your understanding:

EPS
Before you can calculate how many times earnings a stock trades at, you must first determine its earnings per share figure, or EPS. EPS equals a company's net income after taxes, minus preferred dividends, divided by the number of common shares outstanding. Assume that the firm earned $7 million during the most recent full year, and preferred stockholders are entitled to receive $1 million per year. Further assume that the firm has 3 million common shares outstanding. Subtract $1 million from $7 million for a total of $6 million. This is how much money is left with after paying preferred shareholders. By law, preferred stockholders must be paid before common shareholders can receive dividends. Dividing the resulting $6 million by 3 million common shares outstanding for earnings of $2 per common share.

Earnings Multiple
The terms "earnings multiple" and "Price to Earnings ratio," or PE ratio, mean the same thing. To calculate the earnings multiple, divide the stock price by the earnings per share. Suppose the common stock in the above example trades at $40 per share. The earnings multiple is $40 divided by $2, which equals 20. Such a stock would be said to trade at 20 times earnings, or 20 X earnings. A simple way to the same thing is to say that the stock's PE ratio is 20. While the appropriate PE ratio for a stock will depend on a wide variety of factors, such as expected profit growth in the future, risks and so on, a figure of anywhere from 10 to 20 is reasonable. As of November 2012, the average PE ratio of all stocks in the S&P; 500 index was15.5.

 

[Shotgunner51]

That's it? May want to credential yourself how did you learn about these "details". Do you have any real experience in working as a Market Professional? Ever took a company public, or were a part of a global M&A where the stock prices are determined, etc, etc? Or may be this is how it happens in China because the rest of the world follows a different process! Every heard of EPS, DPS, EM? Some of these are provided below for your understanding:

EPS
Before you can calculate how many times earnings a stock trades at, you must first determine its earnings per share figure, or EPS. EPS equals a company's net income after taxes, minus preferred dividends, divided by the number of common shares outstanding. Assume that the firm earned $7 million during the most recent full year, and preferred stockholders are entitled to receive $1 million per year. Further assume that the firm has 3 million common shares outstanding. Subtract $1 million from $7 million for a total of $6 million. This is how much money is left with after paying preferred shareholders. By law, preferred stockholders must be paid before common shareholders can receive dividends. Dividing the resulting $6 million by 3 million common shares outstanding for earnings of $2 per common share.

Earnings Multiple
The terms "earnings multiple" and "Price to Earnings ratio," or PE ratio, mean the same thing. To calculate the earnings multiple, divide the stock price by the earnings per share. Suppose the common stock in the above example trades at $40 per share. The earnings multiple is $40 divided by $2, which equals 20. Such a stock would be said to trade at 20 times earnings, or 20 X earnings. A simple way to the same thing is to say that the stock's PE ratio is 20. While the appropriate PE ratio for a stock will depend on a wide variety of factors, such as expected profit growth in the future, risks and so on, a figure of anywhere from 10 to 20 is reasonable. As of November 2012, the average PE ratio of all stocks in the S&P; 500 index was15.5.

I said there is NO universal formula, you heard that? P/E ratio is only ONE of numerous ways to valuate a company. Now you tell me, when a company has negative earnings, how do you evaluate? You wanna tell me when a company's EPS is -$1/share, "market" is trading at P/E multiple of 20, the share price is -$20????? May want to credential yourself how did you learn about these "details"? Do you have any real basic common sense as a common investor?

At that time, I could go, and ask for 2-3 times the evaluation. So if at that time its evaluation comes at $ 100 million (just an example), you could ask for $ 300 million and may be get over $ 250 million.

Now if you increase numbers, $ 3 billion evaluation means you could ask for $ 9 billion and get around $ 8 or so. Not sure why they did it now. May be they wanted to modernize it and bring in a more mature system for growth? That would be the only thing that would make sense.

Now you tell me this, when a company's valuation is $3B, how to "ask for $ 9 billion and get around $ 8 or so"?

What does "ask" means here, how it works? Show me an example.

 

[DJ_Viper]

I said there is NO universal formula, you heard that? P/E ratio is only ONE of numerous ways to valuate a company. Now you tell me, when a company has negative earnings, how do you evaluate?

Now you tell me this, when a company's valuation is $3B, how to "ask for $ 9 billion and get around $ 8 or so"?
What is "ask"?

you sound very experience in this business. You should continue making your daily living the way you do currently. Don't get into this business here because you'd lose your shirt, tie and probably clothes too with the mindset, and knowledge you just showed me.I have seen millionaires go to bankrupt with wrong knowledge. Just some advise.

Just so you know, there is a universal formula. As of today, 60% of the DOW and S&P (over 500 multi-billion dollar business) are trading over 5-10 times their assessed value and they will go up to new heights. We are super focused on taking our DOW to 20,000 point in the next few days. Since Mr. Trump got elected, there have been over $ 75 billion of new investments and over $ 500 billion worth of profits generated (just in a month and a half!).

You are a mod, you don't have to scream at others when proven wrong. No one knows everything, we are all here to learn from each other. I read up on Chinese threads every day to learn new things. You should be open to it too.

谢谢

becuase they are genetically butthurt

This is the funniest response I've heard today. Good one

 

[Shotgunner51]

you sound very experience in this business. You should continue making your daily living the way you do currently. Don't get into this business here because you'd lose your shirt, tie and probably clothes too with the mindset, and knowledge you just showed me.I have seen millionaires go to bankrupt with wrong knowledge. Just some advise.

Just so you know, there is a universal formula. As of today, 60% of the DOW and S&P (over 500 multi-billion dollar business) are trading over 5-10 times their assessed value and they will go up to new heights. We are super focused on taking our DOW to 20,000 point in the next few days. Since Mr. Trump got elected, there have been over $ 75 billion of new investments and over $ 500 billion worth of profits generated (just in a month and a half!).

You are a mod, you don't have to scream at others when proven wrong. No one knows everything, we are all here to learn from each other. I read up on Chinese threads every day to learn new things. You should be open to it too.

谢谢

Why run away from the simple question? There are companies in reds, aren't there? So are they valued based on your so-called "universal formula" of P/E ratio?

trading over 5-10 times their assessed value

Give me one example of "assessed value", only one.

you sound very experience in this business. You should continue making your daily living the way you do currently. Don't get into this business here because you'd lose your shirt, tie and probably clothes too with the mindset, and knowledge you just showed me.I have seen millionaires go to bankrupt with wrong knowledge. Just some advise.

Why go personal? You sound very ignorant in this field. You should continue making your daily living the way you do currently. Don't get into this field here because you'd lose your everything with the mindset, and knowledge you just showed me. I have seen poor remaining poor simply because of ignornat. Just some advise.

 

[Isotope]

And I am completely unaware if this is a good or bad thing.

Exactly my thoughts. I just hope Pakistan does not dig itself into something that it can never get out of. I have no idea as I am not an economist. Countries are very shrewd when it comes to their national interests. Nevertheless, good luck to Pakistan.

 

[DJ_Viper]

Why run away from the simple question? There are companies in reds, aren't there? So are they valued based on your so-called "universal formula" of P/E ratio?

Give me one example of "assessed value", only one..

Here's a question that you can ONLY answer if you've been in this business and have yourself, done M&A's and guidance / IPO stuff. There is a company worth $ 15 billion, what is the intrinsic value of it? Like I said, google and everything else won't answer it right, unless you've done it yourself. So if you answer it correctly, I would continue to discuss this with you. Otherwise, a wrong answer would mean you have way too long to go and get real experience before you can have this conversation.

No offense is intended and no one is personal. Had you not address me like "Didn't I tell you", I wouldn't have bothered to waste my time. I come here for a reason, and that's for sure not you or other people's posts that waste time. 谢谢

 

[Shotgunner51]

Here's a question that you can ONLY answer if you've been in this business and have yourself, done M&A's and guidance / IPO stuff. There is a company worth $ 15 billion, what is the intrinsic value of it?

Now these:

1. There is no such thing as "intrinsic value", or you give me one example.
2. And also "assessed value" in your previous post, need an example.
3. Back on your "universal formula" of P/E multiple, how to use this to value a company of negative earnings.
4. Please elaborate what is "$ 3 billion evaluation means you could ask for $ 9 billion and get around $ 8 or so."

No offence either nor personal, it's an open forum so let's make the subjects of discussion clear.
धन्यवाद 谢谢 Thanks