It's definitely true that their depreciation is a massive drain on net profit.
But that really displays hidden value. The cap ex and its subsequent depreciation was for earnings expansion rather than maintaining current earnings.
Management could cease cap ex and wait for net profit to catch up with EBITA but that would make little sense at current return on capital
Basically I'm saying underlying performance is much better than net profit.
Really the low net profit displays managements past incompetence (eg. as the writedown does as well). Still, this is a micro cap and you would not disregard this managements ability to blow it up anyway, but this is investing and the current price more than prices in the downside risks.
VTG Price at posting:
24.5¢ Sentiment: None Disclosure: Held
