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Cambodia: Market ‘undecided’ on share value in PPSP as its liquidity soars
The market appears undecided whether the recent fall in the share price of industrial park operator Phnom Penh Special Economic Zone (CSX: PPSP) now offers a good investment opportunity. The board is currently awaiting approval for the share buyback plan submitted to the regulator last week. PPSP shareholders approved the buyback strategy in replacement of a dividend payment in late October.
Liquidity in the stock has soared since its price reached its record low of 1,310 riels a share at the close of trade last Friday. PPSP share transactions registered a record high on Wednesday with more than 290 million riels and 217,740 shares exchanged. Monday through Wednesday this week, trading reached a combined total of 589 million riels with 439,090 shares exchanged.
However, despite the recent high liquidity, the stock price has held relatively steady, in trading above the 1,300 riels/share mark. The current price represents more than a 50 percent drop from the initial public offering (IPO) of 2,890 riels per share in 2016.
At a fundamental level the stock has the highest price-to-earnings ratio (P/E) of any listed company on the exchange at a little over 53 compared with the lowest P/E ratio on the exchange of around 5.5 held by Phnom Penh Autonomous Port (CSX: PPAP).
The P/E ratio is a measure of earnings per share over a company’s last four quarterly reports and is traditionally used for valuing stocks to determine whether they are over-priced or underpriced.
A local investor, who spoke to Khmer Times recently said he had done well from investing on the exchange and is now considering a buy-and-hold strategy with PPSP.
“I was involved in some of the major stock IPOs such as ABC, PWSA and PEPC [and] have been able to profit overall… I am now considering the idea of a buy-and-hold approach for PPSP stock,” the investor said.
Two weeks ago PPSP Chief Financial Officer Fong Nee Wai said in his opinion the company share price (which was trading at 1,490 riels a share at the time) was extremely undervalued and that he believed there were buyers in the market who saw potential value and (would) be prepared to invest and buy shares from sellers.
Fong added that because of the price pressure exerted by sellers, who had possibly had a change in rationale for holding PPSP shares, the share price has drifted lower, a factor beyond the company’s control.
He also noted this was not specifically lmited to the PPSP share price and that most of the shares listed on the Cambodia Securities Exchange (CSX) were also lower, as indicated by the declining CSX index over the past months.
PPSP’s 2020 third-quarter report filed to the CSX showed that its total revenue of $2,538,182 was up 19.53 percent against 2019 third-quarter numbers and the company’s after-tax profit of $270,164 was up 134.86 percent year-on-year.
However, this quarter-to-quarter comparison could be considered misleading when expanded to compare with the first nine months of 2020. PPSP only made $537,246 during that period, down 93 percent compared with $8,615,848 over the same timeframe last year.
According to PPSP Chairman Tan Kak Khun: “The financial position of the company remains strong” with total assets of $95,142,366 and total equity amounting to $59,944,787, representing a debt-to-equity ratio of 0.59.
In addition, to its declining profits and stock price, it was disclosed to the exchange in late November that the company was in arbitration with a Singapore Exchange-listed company. It was revealed that Asiatic Group (Holdings) Ltd (AGHL), the Singapore listed company, had started arbitration proceedings against the PPSP, seeking a minimum of $14.4 million (representing 24 percent of the company’s total equity) in relief over a disputed power supply contract.
Khmer Times has been in contact with Asiatic management since the arbitration case was announced and was told this week: “So far, we are waiting to set a date for the arbitration and will provide further updates as they come.”
PPSP has responded to the claims, stating in a disclosure letter that PPSP denies AGH’s allegations in their entirety and will take all necessary steps to vigorously defend itself against these “baseless” claims.
PPSP is presently considering its options and will keep shareholders informed on its next steps over the coming weeks, consistent with its obligations of confidentiality in relation to the arbitration.
As of market close yesterday, PPSP was trading at 1,330 riels per share.
Source: https://www.khmertimeskh.com/50797201/market-undecided-on-share-value-in-ppsp-as-its-liquidity-soars/