Hi Jean Luc
I just read your post and I agree with everything you have said. The extent of the miss pricing of SGH is something that defies any logic. But what would I know after 40 years working as an accountant in listed companies.
The only thing that I can add is that SGH is a business that many analysts do not like. Not sure if they think it is just a company that chases ambulances or just sheer ignorance of the role that legal companies play in our society. SGH are I fear misunderstood to a large degree and as part of their business involves class actions against the largest companies in Australia, most banks especially will never trust them and to an extent live in fear of future class actions that could arise in the future.
I have roughly $50k tied up in SGH at about $2.85. Plan to take advantage of current pricing when I return to oz in 24 hrs time. Also my time horizon is at least 24 months to hold this stock.. Don't think the market will be convinced until cash flows show a good improvement. Clearly in the first year of owning the former Quindrell business there is a lot of reorganising going on and this involves extra cost and lower productivity. Until we see the H1 results in F17 we won't have a clear picture of the underlying profitability of the UK business beyond all reasonable doubt. In the meantime I am happy with the guidance in F16 although I think they will miss their forecast by between 10 to 15% because of the settling in period and associated costs in F16.
Delay in ASIC investigation is just making shorters rich and not serving the needs of shareholders and the business community.
My hope is that come 1 July next year we will have clear skies ahead of us.
Thanks for your well thought out post
Chrs W2
SGH Price at posting:
$1.11 Sentiment: Buy Disclosure: Held
