EPS figures calculated from Net Profit / 484,000,000 shares outstanding.
RAKCC share price as of 19 Oct 2008 was 1.90 dhs, so 2008 estimated PE is about 1.90 / 0.16 = 11.9, based on Q3 earnings, which a bit higher than the average market PE of about 10. 2008 PE estimate based on M9 earnings is 1.90 / 0.11 = 17.0, which makes shares look even more expensive.
As in several previous quarters, the RAK Cement management report repeats the problem with gas supply shortages and increasing energy costs, and continues to not say what they plan to do about it. However, the change from falling to rising profits for the third quarter could be seen as a good thing - 2008 Q3 profits were the highest since 2007 Q1. In front of every silver lining there is a cloud though ...
The auditor's report for RAK Cement financial statements has a note that Investments held for Trading are stated at cost on the Balance Sheet. Note 4(v) says
RAK Cement 2008 Q3 financial statements 19 October 2008:
The held-for-trading investments are stated at cost. The held-for-trading investments amounting to AED 24,999,991 as shown above have beeen guaranteed and indemnified by a major shareholder against diminution below the cost in the value of investments resulting for sale of such investments. The Company's management believes that these investments will be disposed-off before 31st December 2008. Any gain on sale of these investments will be taken into the current period's income statement.
In other words, RAK Cement bought some shares, one of their shareholders has guaranteed them, and RAK Cement expects to sell these stocks at a profit. Well, that doesn't seem so likely now so it looks like the "major shareholder" is in for a nasty surprise. Interestingly, RAK Cement says in their management report "Ras Al Khaimah Cement has not been affected by the global real estate mortgage crisis."
Uh huh. So what will they have been affected by when they try to sell those shares at a substantial loss?
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