Newsflash for the Snoozers Part 8

Monday, 23rd November 2015 08:58 - by Moosh

Asiamet Resources (TIDM: ARS)

ARS has spent much of this year drilling away at their BKM deposit in Indonesia and it has gone unnoticed by the market. Once the BKM drilling had been completed, ARS issued a resource statement which showed an upgrade to its indicated resources (21 October 2015) and this went unnoticed by the market too.

Clearly the market had an overhanging uncertainty of funding to be dealt with, but dealt with this was with the private placing completed (6 November 2015) followed by a further uncovering of copper deposits in the BKS prospect which also went unnoticed by the market (16 November 2015). The market needs to make up its mind – investors are continually pestering companies to issue news and ARS has been issuing continual news throughout 2015 and the market has been generally ignoring it. It is probably better to make the most of positive news flow while it is forthcoming from a company because when there is no flow of news, you will certainly know about it!

 BXP recently announced 3^rd Quarter results (27 October 2015) which saw the company generate earnings per share of 3.7 Taka (or 3p) for the 9 months to 30 September 2015. Assuming fair value begins at a PE ratio of 10, if we take the earnings for the year so far at 3p then fair value begins quite reasonably at 30p for this long term profitable and dividend paying (cash AND stock) company. With the price at 22.25p (mid-price market close on 20 November 2015), this suggests the current market capitalization to be undervaluing the company on earnings. The top end price for ‘fair value’ at a PE ratio of 17, gives a ceiling to price movement (based on 3p earnings to end Q3 2015) of 51p. The fundamentals of BXP suggests strongly that the price has to play catch-up, and this argument may be strengthened with a recent piece of news that BXP has received US FDA approval to make the heart drug – carvedilol – for export to the US. This is a milestone for the company since it is the first Bangladeshi company to receive such a thing from the US FDA. The company states that it expects to begin exports of carvedilol to the US in the first half of 2016. This was the first drug to be approved for BXP for US exports - with every further drug application that is approved, each will help to further BXP’s export business to the major market of the US and theoretically boost an already healthy earnings per share.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.