If you are going to buy EGRP or AMTD, why don't you consider buying TD instead? As many of you guys have known this already: Waterhouse, the #3 largest on-line brokerage firm, is a 100% subsidiary of TD Bank in Canada. TD is know at least 20% undervalue. Here is the proof:
There are altogether 5 major banks in Canada:
1. Royal Bank (RY): Mkt Cap: 14.5B, Profit: 1290M, Rev: 10.1B
2. Bank of Montreal (BMO): Mkt Cap: 10.2B, Profit: 934.5M, Rev: 9.7B
3. Canadian Imperial Bank of Commerce (BCM): Mkt Cap: 10.2B, Profit: 731M, Rev: 10.2B
4. Bank of Nova Scotia (BNS.TO): Not trading in US market
5. TD Bank (TD): Mkt Cap: 15.5B, Profit: 799.2M, Rev: 6.32B
Based on the profit/revenue numbers, we can easily realize that TD Bank ranks 4/5 among the 5. It has the highest Mkt Cap simply because of it ownership of Waterhouse. However, TD Bank is planning to spin off Waterhouse (selling 10% to the public) next month in order to raise 1B. It means that Waterhouse should worth 10B in TD Bank eyes.
From the profit figures, TD Bank comes very close to BMO and BCM which worth a bit more than 10B now. Just from the banking service, TD should worth about 9B.
As a result, TD Bank + Waterhouse should worth 19B today.
Trading at around $52, TD Mkt Cap is now 15.5B. When Waterhouse goes public next month, TD Bank should be trading at $52 * (19 / 15.5) = $64.
So, I think TD is a really good deal today.
Any comments?
(Note: I've post this out to EGRP and DLJ message board as well) |
