ssi / gcn
GCN - Go Connect - got a mention on the HWW thread...
just thought i'd raise this little query with you share traders out there- would appreciate any feedback/answers
as Tommy correctly pointed out, GCN was one of the first free ISP's, since then it has develepod technology similar to Real Player which allows one to view movies/video content on Mobiles and other applications, and has a diverse number of other revenue streams....it has some pretty impressive relationships with Microsoft, O2, etc...etc....it has also recently appointed the son of one of Aus's wealthiest families as an executive director.( and no..not a Packer/Murdoch, luckily/and or otherwise)...anyway the talk is that this company has a lot of potential...slight problem in that at the moment its not making money and burning cash!!....but anyway.....
the thing is ...GCN has: 348mill share on issue
@.05 cents market cap = $17.5 million
now of these shares 188,000,000 (54.6%) are owned by its listed parent Sino Securities International Limited (SSI) = worth $9.5 million (sino.com.au)
You would think that the market would value SSI ( a little Melbourne- based investment banking co, been around for 15 or so years) at say about $12 - $15m, given its $10m interest in GCN(+ premium for control) and its other bits and pieces and value as a listed entity etc..etc.....
But no...SSI at 16cents is currently valued at $2mil....say you attribute a value of $1m to SSI's other interests (SSI has no debt...save trade payables)....then the market is only valuing its $10mill GCN investment at say $1million!!!!! ( rough estimations only)
which begs the questions:
1) CURRENTLY.... if you want exposure to GCN, why not just get it through SSI where you can effectively buy a GCN share for a tenth of the price, and for less risk? - ( ie if things go bad for GCN you still have SSI's other interests to fall back on ) ( the ultimate in Finance/CAPM theory - HIGHER returns for LOWER risk )!!!!
2) BUT!!!!!!! ......if things turn out well for GCN....say they reach the 60 cents that the broker's report ( 12 month price target ) on the GCN Website (goconnect.com.au)suggests MAY be possible....that would give GCN a market cap of $208million .......and SSI's 54.6% interest worth $114million .One wonders what impact (if any!!!) this may have on SSI"s market cap (which currrently stands at $2m) given that ( in the event that GCN does go reach 60 cents) it would have an investment in a subsidiary worth $114 million......? hmmmmmm.........
Am i too simple?....am i missing something?.why such a difference in value between SSi and GCN?...have i had a couple too many beers ( Jimmy Squires - sorry Robbo!!) in the city after a tough friday in the office? ....or am i just talking sh*t to myslef about two stocks that noone, cept me, gives a t*ss about? Most importantly, why i am still at home on a Friday night, typing out some post which is taking forever when i could be out drinking more jimmy squires?
Some wise man ....or could have been wise woman...just never know with these internet nicknames...anyway some wise person...., alot smarter than me, on another forum, sometime ago...once said about SSI, and i quote this wise person " SSI has to be the dodgiest stock on the ASX"( and that is one hella rap! i was most impressed).....because remember for every seller there is a buyer....remember for every buyer there is a seller.......remember there are TWO sides to every story......the question is...is the SSI/GCN story going to be a fairytale with the happiest of endings or everyones worst nightmare....who knows?.....only time will tell.......hmmmmm..........
Cheers
Steve
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