China Ceramics Co. Ltd. (CCLTF)

[viking86]

AERCF: Just did a quick DD here. Yes, warrants seem indeed pretty undervalued here although redemption seems imminent. As of yesterday's closing, commons traded at 9.75, higher than redemption value at 8.5. With a strike of $5 (?), current intrinsic value is 4.75 but warrants closed at 1.65.

If I see it correctly, with 14.6M warrants at $5 strike, the redemption cash is 73M or C= $2.69/share based on 27.1M diluted shares. Minimum earnout target for 2010 is 36.8M, so on a fully diluted basis:

2010 eps = E = 36.8/ 27.1 = $1.36

2010 forward PE= (P-C)/E = (9.75-2.69)/1.36 = 5.19

Pretty low compared to the earning growth rate of past 4 years, 39% in 2007, 53% in 2008, 41% averaged 2008-2010E which includes a negative growth for recession year 2009. If we slap a modest forward PE of 7 to 8 on the stock , I get a 2010 target of $12.2 to $13.6 for the stock price. Good thing is the common is already trading much above redemption value of 8.5, meaning warrants should trade pretty soon at least $3.5. Anybody?