IS a PE of 13 right for Proven?

Proven Mb siggnProven Investments is accomplishing an unusual feat in the local stock market that not many person were attracted to last year when stocks were selling dirt-cheap.
With the average PE of the market, around 5 times 2015 earnings, and with many blue chip stocks selling at no more than 7 times earnings, it is remarkable that Proven is getting strong demand for their rights issue with the company’s PE around 13 times 2015 earnings. Not surprisingly the directors have agreed to the issue being increased over the initial level of 122,896,618 shares with option for an equivalent amount now sanctioned, in keeping with the term of the prospectus. If both amounts are fully taken up it would increase the ordinary shares from 368,689,855 units to 614.6 million units and would raise nearly US$40 million in fresh capital for the investment bankers.
Proven in a release to the stock exchange advised that the Lead Brokers to the Offer have received applications in excess of the allotted US$19.66 million for the Renounceable Rights Issue of 1 new ordinary share for every block of 3 ordinary shares held in Proven Investments, as offered in the Prospectus dated March 12, 2015. The Board of Directors of Proven have therefore approved the upsizing of the shares made available for subscription, via the Conditional Offer described in the said Prospectus, and the extension of the closing date to April 17, 2015 to allow shareholders the ability to apply for additional shares over their original allotment, as contemplated by the Conditional Offer.
Proven reported profit from continuous operations of US$3.16 million for the nine months to December last year or just under 9 cents per share, in 2013 for the same period profit of US$2.79 million was reported.
There may be a number of factors encouraging investors to go after the stock in such numbers, one is the diversification the issue offers especially for large investors with large amounts of existing listings. With interest rates well under 10 percent a PE of 13 would not be regarded as expensive looked on by itself. Then again investors snapped up Sagicor Real Estate Fund at high prices two years ago in a market that was nowhere as bullish as the current market.
It will be interesting how this one trades in the months ahead and more so against some of the other top performing companies.

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