Aug 13 2009, 04:07 PM
I'm still hibernating...
QUOTE(cherroy @ Aug 13 2009, 04:01 PM)
In stock market, what investors most concern is the ability of the company generate profit, not about what they owned (important also, but more secondary).
Just like BAT has nothing in their book, but every year it can generate lot of profit and dividend to its shareholders, which make lot of people want to own it eventually higher share price.
So back to a property company, it might have lot of land, but those just vacant land which generate nothing to the company, so investors are less interest compared to BAT as above example, so lower share price.
The situation is as same as a shoplot, you can own a shoplot at 500K but no tenant, so even at your book worth 500K, it is a liabilities as it generate nothing while need to pay quit rent and assessment every year. So it is not right for investors to buy the equivalent 500K bookvalue (or NTA) althought those properites might have potential for appreciation.
Just like BAT has nothing in their book, but every year it can generate lot of profit and dividend to its shareholders, which make lot of people want to own it eventually higher share price.
So back to a property company, it might have lot of land, but those just vacant land which generate nothing to the company, so investors are less interest compared to BAT as above example, so lower share price.
The situation is as same as a shoplot, you can own a shoplot at 500K but no tenant, so even at your book worth 500K, it is a liabilities as it generate nothing while need to pay quit rent and assessment every year. So it is not right for investors to buy the equivalent 500K bookvalue (or NTA) althought those properites might have potential for appreciation.
Quote
0.0172sec
0.35
6 queries
GZIP Disabled