My point is, investment cost does not equal value.
True value cannot be determined for private companies. It depends on fundamentals and growth. It could be anywhere between a P/E of 1 (if Solomon is running it with A-shares) and 50 or even 100 for fast growing companies.
Investment at cost in this case reflects a conservative estimate of fair value. Roughly a P/E of 10 to 12. I would say that's fair.
Usually, investment at cost reflects a conservative estimate of fair value. Not when you acquire a company for a P/E of 30, but in this case, it does.
Companies with a history of profitability can be valued differently, by appraisal firms. But that doesn't apply to the MegaFarm. That's why they have to do it this way. Which is still a conservative estimate of TRW's true value.
We should get a P/E 2 or 3 times higher in Hong Kong.