Listed companies with hidden assets

The company's valuations and its share price in most cases may not match. There may be considerable hidden assets within the company but due to various economic reasons, the said company's latest reported regular earnings may be very poor and its share price may not fully reflect its inherent strength.

• For example, Binny Mills in Chennai India had plenty of landed property assets near Koovam River and Central Railway station, worth crores ( millions) of Indian Rupees. But the company's earnings from its regular fabric business was very poor, its share price was struggling around INR 10.  One analyst identified the potential property asset valuations and a local Industrial group of companies started buying the Binny Mills shares from INR 10 and accumulated about 75 percent of the total Binny Mills issued shares.  The property valuations started to go up in Chennai and Binny Mills share price had gone upto INR 1000, a hundred times appreciation, giving the group several hundred crores of total asset holding on their Binny Mills shares. Such investments are to be considered for medium term basis and cannot expect gains in short term.

• In every stock exchange such undervalued shares can be identified, The poor valuation can be due to multiple reasons. In USA Macy's operating revenue used to be normal, but its prime asset holding will make it a worthwhile candidate for buying. 

• However, in developed markets like USA, the companies would have covered such hidden assets with bond issues to raise capital. Recently, it was found that the JC Penny shares in USA was trading below below USD 2, at  USD 1.76. JC Penny had property assets worth considering to accumulate the companies shares. On analysis, it was found out that  more than enough bonds had been issued by JC Penny to cover such property assets and the company may be struggling to meet us bond payments becoming due in near term.

• In Singapore, understand, most listed Transport companies depreciate their assets in shorter time than the real useful life of their assets such as an aircraft by Singapore Airlines or a bus by a listed bus operator, such as SBS Transit, thereby creating a balance sheet hidden assets. When such assets are sold, these companies make extra ordinary gains on which there may not be additional tax paid. Such company shares are, in general, under valued.