THE lure of absolute affordability. It is rather often that we get enquiries on PN4 counters, not surprising given their lure in terms of absolute affordability, which is an amazingly important consideration for individual investors looking to score big on a penny bet. On our part, we have repeatedly cautioned that absolute affordability is not meaningful, and that a 20 sen stock could well be very expensive should the company be in persistent losses, negative shareholders’ funds and high debt. The latter is in fact rather common when it comes to PN 4 companies.
Nine companies starting afresh since July. Against this background, let us take a look at the recent cases of PN4 companies given new leases of life as they relist as restructured entities with new core businesses. Indeed, this report was prompted by the rising pace of such relisting, which should provide ‘real’ empirical evidence as to whether the risk/return profile justifies taking a bet.
