Would you buy shares in an SOE?

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power_080849The Papua New Guinea Government has announced its intention to sell 49% of its shares in two State owned enterprises, Air Niugini and PNG Power.

Air Niugini is earmarked to be the first on the list and the Government has pointed out its intention to directly offer the shares to Papua New Guineans so that the people can have a sense of ownership of these two PNG companies.

The question we’d like to ask you is whether you would take up the offer, when it arises, to buy into any of these two companies.

Like any investment, one must be cautious in its approach to buy shares in any of these two companies because the bottom line for any investor should ultimately be whether the investment in buying shares in either of these two companies will provide a positive return on investment.

The fact that these two companies are “PNG companies” should not be the reason for investing in them.  Rather, one must consider the facts and figures of the relevant enterprise before buying.

Professional investors do not normally invest in companies because of it being a national pride. The facts and figures are fundamentally important and if one is to invest a large chunk of cash in the company evaluating the risks involved becomes all the more important.

If the facts and figures of the enterprise are convincing enough to invest than the feeling of pride is only a “sweetener”.

In some cases, the facts and figures may not always provide a pretty picture of the company but that is not to say that it’s not worth investing in.  Billionaire investor Warren Buffet has made most of his money on companies that although did not paint a profitable picture at the time of investment nonetheless showed it had potential to provide positive returns.

Not many of us have the qualities of Warren Buffet but it is important to consider all aspects of the investment and consult professionals that are in a position to assist you make the right decision.

No one knows for sure how the company will perform in the future but educating yourself on the risks involved and the likely losses and gains will put you in a position to make the best choice of whether to invest or not.

Would we buy shares in Air Niugini or PNG Power?

We’ll need to look at the books first.

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