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**CONSERVATIVELY 59.88% DISCOUNT TO NAV**
Hi again SD
Even with the recent reversion it's still incredibly cheap.
£696m NAV (2021 accounts). Market cap (18th March) £278m. Discount to NAV 59.88%. 2021 buybacks of $10m take the discount to NAV to 60.75%.
NAV growth averaged over 5 years is over 11% per annum (average PAT £80m/on NAV of £696m)
Extrapolating 11% growth to the end of 2023 (NAV grows to £857m) and suggesting a reversion to 20% discount to NAV (the average for UK listed PE capital is 10-20%) suggests a target share price of around 150% upside i.e. £14.43 a share. ((NAV 857m-20%-£278m)/£857m)=1.5
More if we see further buy backs or if the discount drops below 20% or if growth is more than 11% (2019 and 2021 was around 20% PAT). Georgia GDP growth forecast at 5% is 2022 so every reason to think it could be higher. More if there are asset realisations above NAV (just as the majority stake in water company GGU recently was sold 13.4% above NAV!!!!!). More if Iran is brought back in from the cold (as seems to be the case with that lady being released, probably an oil deal soon happening) - Iran is a large trading partner to Georgia.
So the fact you missed buying at £4.50 and it's now £5.80 doesn't mean you've missed out. Far from it :)
Hi Agrcore
The 90% figure comes from Georgia capital own site.
You are right they astonishingly cheap.
I have yet to invest.
I sold some shares on the 15th from my sipp as I don't have to pay tax on them.
But the way Hargreaves Lansdown work I had to sell by the 17th to take money out before the 6th April. I want to put the money into my isa and buy Georgia capital. As you can see Georgia capital has gone up and no doubt the shares I sold have also gone up....annoying. although I am making assumptions about what will happen between now and the 6th April. Either way I will still buy Georgia capital. Bugger!
Hi SD, I don't think that's the case. Refer to:
https://markets.investorschronicle.co.uk/data/equities/tearsheet/profile?s=CGEO:LSE
Shows free float of 35m / 48m and II's make up around 35% of shareholders. Some smart money there, too, if you read the list of institutional investors.
Buy backs make sense to me when it's on such a large discount. A tender offer would be my preferred form of distribution.
Pity I can't get in till the new tax year, as I expect it will have recovered. Possibly 700p.
I think instead of buying back shares all the time paying, a dividend would do more for the share price.
My main worry with this company is, according to CGEO 90% of the shares are owned by institutions. The shares being bought and cancelled are probably coming from retail investors.
Possibility of going private.
*70%+ discount to NAV*
https://en.wikipedia.org/wiki/Economy_of_Georgia_(country)
This is a good read MinusBat. Of significance is Georgia's membership of the EFTA. So there's clearly strong support for Georgia from the West. Of note, too, that the Georgia economy barely shrank during 2020 (when other economies tanked). The recent water utility sale demonstrated the conservative NAV to what is now at a huge discount anyway.
Exposure to Russia (Imports and Exports) is 13%; with Ukraine is around 6%. See:
https://wits.worldbank.org/CountryProfile/en/Country/GEO/Year/LTST/Summary
My take on Georgia's "danger" to a future (further) incursion from Russia is that Ukraine has made this far, far less likely. The political cost of the Ukraine invasion will scar Russia deeply no matter what the outcome of the current Ukraine invasion/special operation.
In conclusion the baby has truly been thrown out with the bath water here and the (now) 70%+ discount to NAV is what is an exciting growth opportunity is probably one of the best opportunities in the market right now......
This seems to be a hard question to answer, does anyone have a feel for it ? Given Russia invaded them, and those two breakaway republics are still under Russian protection, then I would assume that economic ties between the two are slim. So Russia's economy rankings is not going to have much effect on Georgias. On the other had, its all the same region and some places I looked say that Russian tourism is a big source of Georgian income. So after "doing my own research" I feel I am less confident than when I started.
I will probably add a bit more to my position tomorrow, seeing how things go, but am unwilling to commit too much. The stuff CGEO is invested in isnt particularly exposed to tourism, but it will be affected by the wider economy.
@SD235: "As in you have sold? If so why?"
No, I'm still holding. I simply mentioned that I've also been a shareholder in the two Georgian banks: TBC and BGEO.
BGEO is one of the biggest holdings in the CGEO portfolio.
"I will have some in the new tax year by then I would hope the Russia Ukraine stand off will be sorted....peacefully."
No chance of that then.
Well, it does indeed seem to have taken a hammering as a result of the invasion of Ukraine, but for me I think thats a point to buy back into it.
Hello CaneToad
"I've already been an investor in BGEO and TBC."
As in you have sold? If so why?
CGEO looks great value. They are buying back shares but it doesn't appear to be having much effect.
I will have some in the new tax year by then I would hope the Russia Ukraine stand off will be sorted....peacefully.
I definitely fancy this for my isa next year.
I look at it as a growth investment in the frontier sector. My investments in Vietnam trusts are doing exceptionally well bought January and February 2021 and up 23%.
Second purchase in January this year is just breaking even, which is good in the present circumstances.
Even if CGEO's stays on the same discount I reckon it will be a decent growth stock, the discount narrowing is just a bonus...albeit a very big bonus!
I continue to like the fundamentals of CGEO but I expect it will take a bit of a hammering should Russia's invasion of Ukraine go ahead, which at this point looks 50:50. The opposite is also true, Russia stepping back would likely increase CGEO's price but in this instance I suspect the downside is bigger than the upside.
I intend to buy back in once the situation crystallises one way or the other.
I'm also looking to take a punt here. From what I can tell, the market cap is supported by the Water Business and Bank of Georgia alone. Clearly they need to do more marketing of the company to UK investors, but if they declare a decent dividend and/or do a chunky share buy-back, perhaps that will help. I've already been an investor in BGEO and TBC.
I've bought in here today after also considering Bank of Georgia.
Discount to NAV is significant but I suspect this is somewhat due to the number of unlisted investments that are inheritently more difficult to value.
However, even allowing for an arguably inaccurate NAV, I like their soon to resume dividend policy and price relative to pre-COVID trading.
I hope so - I too think its hugely undervalued, but its hard to see what the catalyst would be for a re-rate, even if the NAV rises. A bit more publicity wouldn't go amiss...
Massively under asset value , and with Bank of Georgia shares going through a big surge this seems too be getting overlooked Bank of Georgia up 7.5% today and subject to a strong Peel Hunt buy recommendation . The bank of Georgia stake will add considerably to NAV if it continues to rerate and sooner or later this will tag along for the journey .
So, I bought 10k because the price looked good - 629.00 / 637.00 - but what I actually got was 647.00! which is now showing up as a nice bounce on my Apple stocks app, just down to me. Hmmm....
Indeed :-)
Almost 5% move today on the volume of - wait for it - 14k!
I hope that a breakout from this range will happen, the company objectively has more assets than before COVID yet is valued at 60% compared to 2 years ago. Not even the GEL/USD depreciation can explain that.
Haha it's ok I don't use LSE too often myself...at least CGEO is free of 'ranting' compared to other stocks on here, but that's only because the number of people who have ever commented is approximately 3!! :-)
Good spot regarding the 300k seller, thanks for that, and for summary of earnings call.
I still really like this stock for diversification - it's quite different from anything else I hold; and from a macro perspective - my thesis is that big family offices and institutions will look at it as the trend for re-allocation to emerging markets continues, and when they do it won't take much to move it, as you say.
Not a holder forever though - I will be pleased to sell a bit to those people once they start buying.
Haha, I shoud've chosen a better username here and I should come here more often.
CGEO looks nice, the rebounding and trend reversal was pretty obvious in mid-2020. Since then it is a nice growth, technically trailing the 10-day MA with 2 or 3 breaks on very little volume.
The tragedy is how slowly moving this stock is and how low the volume is. 1k of shares can easily move the price 5% in either direction on some days. Perhaps I should dump it and go all in into AMC and GME...
The latest earnings call (last week) was nice, main takeaway is they want to get rid of their beverage business, possibly hospitality (hotels) and focus on the large parts of the portfolio - healthcare, pharmacy, renewable energy and education (small part now but they see large growth potential). Also they want to demonstrate their abilities by exiting one of the large businesses - they believe it should attract more interest and more trust from foreign institutional investors.
Another thing that would help if BGEO situation with the regulator became more clear and it was allowed to pay out dividend. Just the recent BGEO rise (964p on Mar/1 to 1298p on May/28) should bring a nice NAV increase to CGEO.
N. Gamkrelidze recently sold 200k shares, he's the CEO of Georgia Healthcare, formerly listed under the GHG ticker. He should still hold around 300k shares if the data is correct.
Rebounding nicely on what was otherwise quite a down day for markets.
Not quite taking to yourself :-) Am curious as to what moves the price on this though - buybacks cant continue forever, after all...
The chart looks ridiculously ready for a breakout.
My guess is the company is doing buybacks at anything below 5.6 GBP and the range is getting tighter.
Buybacks seem to continue.
Also I'm probably the only person in the world who cares about this stock so I'm here talking to myself.