LloydsTSB Shares

wary

wary wrote: »

Any thoughts on what the impact of the LTSB-HBOS merger is likely to have upon the LloydsTSB share value

I guess we have our answer. First day of the merger and the already-deflated share prices has lot about a third of its value!

I,_Brian

Anyone seriously think a market cap of £5.6 billion really reflects the value of LLOY?

Certainly don't here - devalued they may be, but bear markets are no more renown for accurately reflecting the value of companies as bull markets.

mrposhman

I,_Brian wrote: »

Anyone seriously think a market cap of £5.6 billion really reflects the value of LLOY?

Certainly don't here - devalued they may be, but bear markets are no more renown for accurately reflecting the value of companies as bull markets.

Having looked at my 50% loss on LLoyds :mad: :mad: I decided to cheer myself up, hoping that today was hopefully a write off due to the lower volumes and shorters enjoying themselves. I'm hoping tomorrow will be a fresh day and some of these losses will start dwindling away.

I did some crude figures just now to try and cheer myself up and it doesn't seem too bad.

The LBG today has a market cap of £10.6bn (your basing £5.6bn on only Lloyds TSB shares not LBG), based on the number of shares being 16.4bn in issue with a closing rate of 65p, hence £10.6bn.

However, at close of play on Friday (includes a substantial drop from Thursday) the market cap of Lloyds was £8.4bn based on a closing price of 98p and HBOS had a market cap of £9.1bn based on a closing share price of 70.1p.

Therefore on Friday, the combined market cap should have been around £17.5bn amounting to a share price of £1.07.

Whats more last monday, the combined market cap would have been £22.9bn with a combined SP of £1.40, so hopefully all is not lost and we may be able to start to move back to a more reasonable valuation of a company that should be worth far more than it is currently. Obviously there will be further writedowns, though Lloyds is a good bank and their management should release the potential out of HBOS and get rid of the bad eggs within (both people and investments).

Watching on Sky News and Blank says that HBOS's mortgage book is actually quite secure so hopefully not too many writedowns though he has mentioned there could be some from their investment arm as expected.

I averaged down today, now to £1.04 but frankly have more money than I would want in them. If we can start rising then we shall see what we do.

sabretoothtigger

Im not sure anyone knows how bad these banks debts are except maybe rbs has finally confessed all under government duress. oldish chart:

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mrposhman

Thats probably correct that no-one knows but at leat a good proportion has probably already been priced in.

Besides if you look at the financial behind any future profits, they still bode quite well.

Based on a P/E of 5 and a share price of £1.00, the earnings after tax that the group would require is just under £3.3bn.

Despite the P/E being very low at 5 as it is most likely to be higher than that, then this profit doesn't seem too outlandish based on previous years profits of the combined 2 companies. If it was to be a P/E of 10 then this would reduce to about £1.65bn.

Theres still a lot to be written off (I'm sure everyone knows about that) but the overall financials support a much higher share price than is currently being seen.