Daily analyst comments
Razguliay to hold SPO at a discount to free market price
10.07.08 11:02
The company's price for an SPO of its common shares is short of its current stock valuations, which, in our view, may exert a downward pressure on quotations for its shares in the near term. All the same, we are upbeat about the company's plans to raise finances for expansion of its land reserves and its resource base.
On Wednesday the Razguliay group disclosed the price for the placement of additionally issued shares within an SPO. The offer price was fixed at USD 7.75 per share. In all, the company aims to distribute about 30 million additional common shares during the SPO, at around 25% of its current charter capital.
We do not exclude that the offer price of USD 7.75 per share may impair quotations for the company's shares in the short-term, as the price is more than 9% down on the company's stock valuations as of July 8. Despite this, we remain upbeat about the company's plans to raise over USD 230 million via an SPO to finance its land reserve expansion strategy.
Our estimates put the fair price of Razguliay at USD 10.2 per share, which implies an upside potential of more than 27% to the current stock valuations.