Deap Capital

[knightofdelta]

Deap Capital released their half year results recently and has been able to increase return on equity from 0.14 to 0.84, with a possible year end ROE of 1.68, which is not too bad. They have also been able to grow their earning per share for the 2nd quarter to 42K from 13K in the 1st quarter, which means that their projection for the year end from the 1st quarter have been thrown into a non-linear positive spin. Their projected year end earning per share now comes to 84K making their forward price earning multiple at the current price of N8.70 to drop to 10.36x.

This has effectively made Deap Capital one of the cheapest stocks in the NSE with a conservative fair value of N18.47, which means that it is presently selling at a 53% discount.

What do you guys think?

[anekwlc]

Originally Posted by knightofdelta

Deap Capital released their half year results recently and has been able to increase return on equity from 0.14 to 0.84, with a possible year end ROE of 1.68, which is not too bad. They have also been able to grow their earning per share for the 2nd quarter to 42K from 13K in the 1st quarter, which means that their projection for the year end from the 1st quarter have been thrown into a non-linear positive spin. Their projected year end earning per share now comes to 84K making their forward price earning multiple at the current price of N8.70 to drop to 10.36x.

This has effectively made Deap Capital one of the cheapest stocks in the NSE with a conservative fair value of N18.47, which means that it is presently selling at a 53% discount.

What do you guys think?

I agree with your analysis but I have been finding it difficult to understand their major source of Profit. We need a way to confirm that they are going to sustain the results. Do you have any info to share?

[knightofdelta]

Originally Posted by anekwlc

I agree with your analysis but I have been finding it difficult to understand their major source of Profit. We need a way to confirm that they are going to sustain the results. Do you have any info to share?

They invest in stocks like you and I but with lots of money and they are also into asset management. If you give them like N1 million, you can agree on what percentage you expect in a minimum of 6months and then they take the change on top and add it to their profits...

[Abinishio]

Is is that easy?
na way ohh
caveat emptor

[anekwlc]

Originally Posted by knightofdelta

They invest in stocks like you and I but with lots of money and they are also into asset management. If you give them like N1 million, you can agree on what percentage you expect in a minimum of 6months and then they take the change on top and add it to their profits...

Thanks. The question is can the bussiness sustain this type of result they are declaring. 2007 may be a good year for fund managers and stock borkers. Not sure if this stock is attractive to me.

[zainabusman]

Originally Posted by knightofdelta

Deap Capital released their half year results recently and has been able to increase return on equity from 0.14 to 0.84, with a possible year end ROE of 1.68, which is not too bad. They have also been able to grow their earning per share for the 2nd quarter to 42K from 13K in the 1st quarter, which means that their projection for the year end from the 1st quarter have been thrown into a non-linear positive spin. Their projected year end earning per share now comes to 84K making their forward price earning multiple at the current price of N8.70 to drop to 10.36x.

This has effectively made Deap Capital one of the cheapest stocks in the NSE with a conservative fair value of N18.47, which means that it is presently selling at a 53% discount.

What do you guys think?

Hmm. I think it will be tough for them to repeat the half year earnings in the last two quarters. As we can all see the NSE all share index is down. I cannot see any fund manager/stocbroker outperforming his 2007 performance.

We would know more when we see the public offer documents assuming they are still going through with it.

[ofonzo]

DEAP CAP has 3 Susidiaries Resort Saving & Loans, Resort Securities and DCVF (A finance company for oil industry projects & Contractors).
In terms of assets, I understand they have a mining lease which will be exploited in the near future and Resort S& L is building a new town in the Mowe/Ofada Axis.
I presume the bulk of the 2Q income came in as commission for the recently concluded PP for Resort.

The board is also composed of men/women of proven record.

Ofonzo

[Babs_O]

I smell sharp practices !
Especially with the frequency of raising cash here and there.

Hope I am wrong and they made good money from oil and gas related facilitations and not round tripping stocks from PP and PO's (preferential allotments) to the secondary market. That just rips off the economy and not help it if allowed to go on unchecked.