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As per Comsec, SOL owns 42 % of BKW. As at 2017 / 07 BKW market cap is 1.9 B.
BKW owns 42 % of SOL. SOL market cap as at 2017 / 07 is 4.2 B.
Based on the above, BKW is highly under valued and a good buying opportunity.
Is that a right conclusion ?
Is it right to say that we should buy BKW and not SOL ?
A: Thanks for the question.
On the basis you have outlined (market cap), it is a reasonable conclusion. However, the cross holdings cannot be readily liquidated and market capitalisation can change quickly.
Valuations are usually performed by looking at discounted cash flows or a multiple of prospective earnings – I would be using these to help guide an investment decision.
For the record, the broker consensus target price on Brickworths is $15.803, just marginally higher than the current price of $15.70. Each of the major brokers that rates the stock is neutral (according to FN Arena).
If buying Brickworths (BKW) because of the value of its holding in Soul Pattinson (SOL), you may need to be quite patient.
Regards
