Iraqi telco Asiacell shares surge on bourse debut

[TrinityeXchange]

UPDATE 1-Iraqi telco Asiacell shares surge on bourse debut

Mon Feb 4, 2013 2:48am EST

By Aseel Kami and Matt Smith

Feb 4 (Reuters) - Shares in Iraqi mobile telephone operator Asiacell jumped the maximum 10 percent in their Baghdad bourse debut on Monday after investors in the company raised $1.24 billion in Iraq's largest-ever share offer.

The shares were at 24.2 dinars at 0707 GMT on the Iraq Stock Exchange (ISX). A total of 780,000 shares had changed hands as of that time; the stock is allowed to trade within a 10 percent range up or down, according to bourse rules.

In a public offer that closed on Sunday, investors in Asiacell - majority-owned by Qatar Telecom (Qtel) - sold 67.5 billion shares at 22.0 Iraqi dinars each, offloading a quarter of the company's share capital.

It was the first big share offer in Iraq since the U.S.-led invasion of 2003 and largest equity offer in the Middle East since 2008.

"The stock is unlikely to be very liquid considering that a large part of the share sale was bought by foreign direct investors who are likely to keep the shares for a long time," said Hassan Aldahan, chairman of Baghdad-based investment company Bain Alnahrain.

Foreign investors bought about 70 percent of the shares sold in the offer and Qtel was expected to be a major buyer, Layth Sulaiman, head of the exchange's board of governors, said last week.

The Qatari company agreed in June to pay $1.5 billion to raise its stake in Asiacell to 60 percent from 30 percent.

Ahead of the public share offer, Qtel's stake stood at 53.9 percent, with the remaining 6.1 percent awaiting regulatory approval, so it was expected to use the flotation to acquire the rest of what it was due. Qtel has so far not commented on the results of the Asiacell offer.

The offer was seen as a test of investor confidence in Iraq as the country recovers from years of war, political instability and financial sanctions.

Asiacell's listing values the telecommunications operator at $5.4 billion, and its listing more than doubles the Iraqi bourse's market capitalisation.

"This marks the birth of the ISX as a real stock market," said Bartle Bull, portfolio manager of Northern Gulf Partners' Iraq equity fund in New York.

"Iraq has a far more open, dynamic business culture than many Gulf countries. The Iraqis are smarter and tougher. We should see some more companies coming."

Among future listings are likely to be Asiacell's domestic rivals Zain Iraq, a subsidiary of Kuwait's Zain, and France Telecom affiliate Korek. Like Asiacell, they are required to offer a quarter of their shares under the terms of their operating licences, having missed an initial August 2011 deadline to do so.

"The big cell phone companies are the bellwether stocks in any market, they're so well correlated to the overall GDP story - that's why international investors get into these markets," said Bull, who invested about 10-20 percent of his fund's money in the Asiacell offering.

He said he expected Zain's share offer to be launched by mid-year.

"Zain of Kuwait is one of the great, well-known emerging market stocks because they are in a bunch of other Middle East and Africa markets - fund managers trade this stock," Bull added.

[RVPleaseToday]

Definitely a game for big investors. Ten percent of two cents ain't much in real dollars if you are a small investor. The stock should be a nice long term hold, though.

[moneysoon]

Now for the steady march. It will be nice when Level II platforming makes it debut. Can you say, "'thou cup runneth over?" Who is offering the best intraday charting, Mubasher, Bloomberg, or some other interface? I am happy this will lead to bigger things. Last I remember, there were two leading theories of what would happen to valuation in the ISX should a "change" happen with their currency. Depending on your view of what will happen with the ISX and the currency, two cents is not really two cents anymore, right... The same smoke that has been blown about the currency has been stated about holdings in the ISX.

Here is another hunch, the 70% foriegn investors were not necessarily "Westerners" as one might think. If these outside investors were MENA investors and of that, some State investors, which we KNOW some were, would they take kindly to the notion that zeros would just drop off thier investment dollars without a strong fiscal remedy? Longterm holders are on the scene for a reason. The MENA investors are here for several "long-term" reasons. My read is to play this hole long and slow because it is going to run fast on its own.

Blessings All!

[matthew6:19-21]

Now for the steady march. It will be nice when Level II platforming makes it debut. Can you say, "'thou cup runneth over?" Who is offering the best intraday charting, Mubasher, Bloomberg, or some other interface? I am happy this will lead to bigger things. Last I remember, there were two leading theories of what would happen to valuation in the ISX should a "change" happen with their currency. Depending on your view of what will happen with the ISX and the currency, two cents is not really two cents anymore, right... The same smoke that has been blown about the currency has been stated about holdings in the ISX.

Here is another hunch, the 70% foriegn investors were not necessarily "Westerners" as one might think. If these outside investors were MENA investors and of that, some State investors, which we KNOW some were, would they take kindly to the notion that zeros would just drop off thier investment dollars without a strong fiscal remedy? Longterm holders are on the scene for a reason. The MENA investors are here for several "long-term" reasons. My read is to play this hole long and slow because it is going to run fast on its own.

Blessings All!

I own shares in several stocks but the one thing I have asked many times is what is going to happen to the actual amount of shares we own post rv lets say at 1 to 1? If we own for example 2 million shares in company XYZ what will the number of shares be at an exchange rate of 1 to 1. I trade penny stocks right now on the OTCBB and Pink sheets and what we are buying on the ISX right now is basically penny stocks. With a drastic change in the currency exchange rate these companies are going to be worth multi millions of dollars without lets say a reverse split, which is what I could possibly forsee happening. Clothing companies, rug companies, paint companies, would be worth more than apple, microsoft, exxon etc. Level 2 for Iraq would be very nice better than that though to be able to trade the ISX on Etrade and Scottrade and other brokers. Any thoughts on the subject of post rv shares would be much appreciated.

[moneysoon]

I own shares in several stocks but the one thing I have asked many times is what is going to happen to the actual amount of shares we own post rv lets say at 1 to 1? If we own for example 2 million shares in company XYZ what will the number of shares be at an exchange rate of 1 to 1. I trade penny stocks right now on the OTCBB and Pink sheets and what we are buying on the ISX right now is basically penny stocks. With a drastic change in the currency exchange rate these companies are going to be worth multi millions of dollars without lets say a reverse split, which is what I could possibly forsee happening. Clothing companies, rug companies, paint companies, would be worth more than apple, microsoft, exxon etc. Level 2 for Iraq would be very nice better than that though to be able to trade the ISX on Etrade and Scottrade and other brokers. Any thoughts on the subject of post rv shares would be much appreciated.

Matthew,

I too am a pink sheets guy. I have seen several articles and posts about what could happen with a lop/RD/RV scenario and the ISX. Again, I am leaning on the notion that MENA investors, who were heavy supporters, would not take kindly to an unequitable settling of funds. Many things will come as smoke. However, I am banking that we are IN with the in-crowd. I would definitely like to see "full capabilities" including margin acounts. I am certain I will not know what to do with myself when this day arrives.

Blessings,

[TrinityeXchange]

Matthew,

I too am a pink sheets guy. I have seen several articles and posts about what could happen with a lop/RD/RV scenario and the ISX. Again, I am leaning on the notion that MENA investors, who were heavy supporters, would not take kindly to an unequitable settling of funds. Many things will come as smoke. However, I am banking that we are IN with the in-crowd. I would definitely like to see "full capabilities" including margin acounts. I am certain I will not know what to do with myself when this day arrives.

Blessings,

wow i am amazed at you two as i also played the pinks for a good stretch! incredible.

let me throw a monkey wrench in this discussion. many of us are looking at what the isx will do from an rv perspective and there has been much speculation. but there is something that will effect the isx just as profoundly.....property value of listed companies. see right now when you look at the balance sheet of an iraqi hotel or some industrial plant holding large acres of land, the property's value is wayyyyyyyy undervalued. please read the article i posted a long while ago, it is incredible stuff. i bumped the article to the top of this forum for easy reference.

now how will this hidden gem affect the book value, balance sheet and eventually worth of a company trading on the isx?

here is an excerpt:

The ISX-listed industrials are best known for their main products, which include everything from polyvinyl chloride pellets (used for plastics production) to refrigerators and air conditioners. These companies are typically partially state-owned holdovers from Saddam Hussein’s time. Many have difficulty competing with imports. Often their factories are overstaffed, have obsolete machinery, and are running well below full capacity.

Yet some of them are sitting on a gold mine—the land their factories were built on. Typically this was bought decades ago and is recorded on the balance sheet at a cost of only a few hundred thousand dinar. Even back when one dinar was worth over US$ 3, these valuations were seldom equivalent to much more than a million dollars. Since then, years of money printing, inflation, and deprecation have reduced the book values of these factory sites to almost nothing.

The market value of this property, however, is a lot more than zero. Land in Baghdad, for example, may be worth anywhere from US$ 350 per square meter to well over US$ 1,000 per square meter. It is easily conceivable that many of the companies are now at steep discounts to their market-price adjusted net asset values.

Read more: http://dinarvets.com.../#ixzz2K661HoaE

[sandyf]

I own shares in several stocks but the one thing I have asked many times is what is going to happen to the actual amount of shares we own post rv lets say at 1 to 1? If we own for example 2 million shares in company XYZ what will the number of shares be at an exchange rate of 1 to 1. I trade penny stocks right now on the OTCBB and Pink sheets and what we are buying on the ISX right now is basically penny stocks. With a drastic change in the currency exchange rate these companies are going to be worth multi millions of dollars without lets say a reverse split, which is what I could possibly forsee happening. Clothing companies, rug companies, paint companies, would be worth more than apple, microsoft, exxon etc. Level 2 for Iraq would be very nice better than that though to be able to trade the ISX on Etrade and Scottrade and other brokers. Any thoughts on the subject of post rv shares would be much appreciated.

I have addressed this point a few times but it just seems to get lost in the hype.

It here is a large RV of say 1 to 1, the value of a company would not change. If the company was worth say $1 million before, it would still be $1 million after. The accounts would have to be restated to reflect the change and the number of issued shares reduced accordingly. Under Iraq law, shares have a nominal value of 1 dinar. So if the company capital was reduced from 116 billion dinar to 100 million dinar shares would be reduced to the same amount.

Company capital, shares, assets etc have to be valued on a historical cost basis and cannot benefit from a change in currency value. Only 'cash items' in the accounts would be adjusted by any RV.

[moneysoon]

I have addressed this point a few times but it just seems to get lost in the hype.

It here is a large RV of say 1 to 1, the value of a company would not change. If the company was worth say $1 million before, it would still be $1 million after. The accounts would have to be restated to reflect the change and the number of issued shares reduced accordingly. Under Iraq law, shares have a nominal value of 1 dinar. So if the company capital was reduced from 116 billion dinar to 100 million dinar shares would be reduced to the same amount.

Company capital, shares, assets etc have to be valued on a historical cost basis and cannot benefit from a change in currency value. Only 'cash items' in the accounts would be adjusted by any RV.

sandyf,

I for one have not forgotten your's or other posts regarding one theory of an adjustment in the ISX should the currency change value. I just happen to be in a crowd that focuses on the potential upside in the ISX should factors playout as we project. Not bragging at all..., but I am in a All In, Win/Win, non-traditional, non-conservative 'players club' on the ISX. Currently we are 1-0 on the new turn in the market because we forwent a "chicken-little" mentality. There is a plethora of reasons why I am long on the ISX and remain "All-In" in certain sectors. Amidst all of the smoke, we have been provided a steady stream of truth that has proven reliable. My opinion is this: it may or may not split, but whatever it does, I do not believe ISX'ers will get the short end of the stick. For several reasons, I do not believe Iraq would want to say thank you to their "Gulf Parntners" with a very visible fiscal inequity, in any form. The Gulf States are working on producing something very big together, no hype just hope. Perhaps, the "Westerners" who keep spewing off NYSE rules and play strategies have realized by now that those "rules" do not apply for the ISX. Those who figured this reality out a long time ago have "Already" made their money because of this knowldge, in more ways than one????

Anyway, those who "go the way of the ant" will reap a harvest when this is all said and done.

Blessings All, Stay the Course!

[matthew6:19-21]

Matthew,

I too am a pink sheets guy. I have seen several articles and posts about what could happen with a lop/RD/RV scenario and the ISX. Again, I am leaning on the notion that MENA investors, who were heavy supporters, would not take kindly to an unequitable settling of funds. Many things will come as smoke. However, I am banking that we are IN with the in-crowd. I would definitely like to see "full capabilities" including margin acounts. I am certain I will not know what to do with myself when this day arrives.

Blessings,

Your not the only one who won't know what to do with themselves.

[matthew6:19-21]

wow i am amazed at you two as i also played the pinks for a good stretch! incredible.

let me throw a monkey wrench in this discussion. many of us are looking at what the isx will do from an rv perspective and there has been much speculation. but there is something that will effect the isx just as profoundly.....property value of listed companies. see right now when you look at the balance sheet of an iraqi hotel or some industrial plant holding large acres of land, the property's value is wayyyyyyyy undervalued. please read the article i posted a long while ago, it is incredible stuff. i bumped the article to the top of this forum for easy reference.

now how will this hidden gem affect the book value, balance sheet and eventually worth of a company trading on the isx?

here is an excerpt:

The ISX-listed industrials are best known for their main products, which include everything from polyvinyl chloride pellets (used for plastics production) to refrigerators and air conditioners. These companies are typically partially state-owned holdovers from Saddam Hussein’s time. Many have difficulty competing with imports. Often their factories are overstaffed, have obsolete machinery, and are running well below full capacity.

Yet some of them are sitting on a gold mine—the land their factories were built on. Typically this was bought decades ago and is recorded on the balance sheet at a cost of only a few hundred thousand dinar. Even back when one dinar was worth over US$ 3, these valuations were seldom equivalent to much more than a million dollars. Since then, years of money printing, inflation, and deprecation have reduced the book values of these factory sites to almost nothing.

The market value of this property, however, is a lot more than zero. Land in Baghdad, for example, may be worth anywhere from US$ 350 per square meter to well over US$ 1,000 per square meter. It is easily conceivable that many of the companies are now at steep discounts to their market-price adjusted net asset values.

Read more: http://dinarvets.com.../#ixzz2K661HoaE

Yes Trinity I agree. The land deal is going to come into play IMO without a doubt. That is one of the reasons I like IBPM they have been established since 1962. They have got to be sitting on some decent property. They "had" a really low float its only 540,000,000 outstanding shares according to the ISX website which is not the most up to date source of info in the world but about all we got. They did just offer 100% paid up shares which if that was completely filled would double the float still not to terribly high for a "penny stock". You can tell the float is still low because the stock changes pretty radically with very little volume. I think we got about 2 to 3 years and we will be blowing full steam ahead on the ISX and we will have a decent value on the dinar. If they can get the ISX on Scottrade and Etrade o'boy here we go!!!!!!!!!!!!!!!!!!!!!!!!!

[unirod]

I have addressed this point a few times but it just seems to get lost in the hype.

It here is a large RV of say 1 to 1, the value of a company would not change. If the company was worth say $1 million before, it would still be $1 million after. The accounts would have to be restated to reflect the change and the number of issued shares reduced accordingly. Under Iraq law, shares have a nominal value of 1 dinar. So if the company capital was reduced from 116 billion dinar to 100 million dinar shares would be reduced to the same amount.

Company capital, shares, assets etc have to be valued on a historical cost basis and cannot benefit from a change in currency value. Only 'cash items' in the accounts would be adjusted by any RV.

Sandyf,

Based on your post that only cash items in the accounts would be adjusted by an R/V. Would owning Bank stocks be the best bang for your buck in your opinion?

Thx

[sandyf]

Sandyf,

Based on your post that only cash items in the accounts would be adjusted by an R/V. Would owning Bank stocks be the best bang for your buck in your opinion?

Thx

Not in the way you think, although I think bank stocks would do well. Strange as it may seem 'Cash' to a bank is an asset, unless categorised as a 'cash item'.

Bit of reference.

Cash Items

Cash items are checks or other items in the process of collection that are

payable in cash upon presentation. A separate control of all such items usually

is maintained on the bank’s general ledger, and international division general

ledger, if applicable, and is supported by a subsidiary record of individual

amounts and other pertinent data. Cash items and the related records usually

are in the custody of one employee at each banking office who is designated as

the city cash collection, or exchange, teller.

In addition to those items carried in the separate account entitled “cash items,”

on the general ledger, most banks will have several sources of internal float in

which irregular cash items can be concealed. Such items include any

memoranda slips; checks drawn on the bank; checks returned by other banks;

checks of directors, officers, employees and their interests; checks of affiliates;

debits purporting to represent currency or coin shipments; notes, usually past-

due; and all aged and unusual items of any nature that might involve fictitious

entries, manipulations, or uncollectable accounts.

If the cash items are not in the process of collection, they should be included

on the bank’s books in an appropriate account and shown under “other assets.”

http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/cash1.pdf