MF analysis today, page-5

I been thinking this for some time.

Now, all this is my thoughts and some kind of an explanation as to why I have complete faith in my decision to buy into this company - I don't see this as 'ramping' and it's not intended to be.

And, perhaps something here might be relevant for anyone who might be considering buying in to or NOT buying into SGH - only they can decide.

So ... here goes ...

Maybe it's time for something completely different ... for people who, like me, can't do sums ... ... let's call it, Denbo's ramblings.

For the last few month, on this forum, I've been trying to make sense out of the calcs those people who CAN do sums have been doing.

All that seems to come into the calcs I've seen so far is assumed current WIP and estimates of debt/loan/wip and the rest of the stuff people who like sums come up with.

Now, I get that all people have got to work on, like my accountant, is history. And they do the best they can with it.

Good on them and I thank them for their efforts.

But, my attitude is, if any business is going to be worth a crumpet in the future - it's history is ... well ... history.

I may be missing something, but no-one on this forum seems to have factored in that SGH in UK is going to get any NEW business.

My reasoning is ... SGH, over 80 years, has established a market in Aus. which has made it a leading law-firm in Aus. - better than ANY of the others. and despite having a history of potentially company-busting problems in the past - which it's survived.

It's always been a battler - and what doesn't kill you, makes you stronger. These days must have more resources than ever to draw on.

And it's been a leader. Let's do no-win-no-fee ... lets go public ... let's diversify overseas ... what's next ...

The rest only follow - in a feeble attempt to keep up.

Stuff I speculate on ...

I'd say SGH's forward-thinking management has probably realised it's reached it's max potential in Aus with it's population only 24 million, spread-out people.

Rather than sit on it's hands, it's management has decided that, in order for the company to grow into a future it should seek/make additional opportunities elsewhere.

This in itself I find encouraging.

While the 'competition' in Aus. is stagnating SGH is going off on an adventure to find a new world for it's product.

And, what a good place to start, in my opinion, than Pommieland.

Same language, similar attitudes towards life - and a population nearly 3 times that in Aus. in an area about the size of Victoria - heck, they even drive on the same side of the road.

So, if SGH gets it right, mabe they can develop a business an additional 3 times what it is now.

It maybe not heppen overnight but, like Pantene, it WILL heppen - probably.

What prospective long-term shareholder - or bank - wouldn't want to be involved in that?

And, as anyone who's ever tried it knows, there's no gain without pain - and SGH is experiencing a bit now.

Who in their right mind thought there wouldn't be some?

Especially when you involve other people - who invariably have an agenda not in line with yours.

I've taken over businesses in the past - and when I have, I've looked at the potential for NEW business - not just taking over what the business was doing. (Because if it was doing OK it probably wouldn't be up for sale - and if there wasn't room for growth, why bother buying it. All you're paying for is good will and lazily picking up an income stream without having to create it yourself. A bit like buying a lawn-mowing round instead of building your own).

And to sort of confirm the above comment, SGH did just ths and bough an exisiting book of business, which it seems, has turned into it's found it's first hurdle.

One day it will also be in SGH's history and of no consequence to it's future - and already, SGH is making one and kicking some goals on it's own by doing a deal with a major insurance crowd - a first step in the right direction.

What comes next for SGH?

Who knows - but the new world it's making for itself is it's oyster.

Pommieland is very much virgin territory for an SGH business I'll bet it won't be long before NEW UK business starts coming on board from the new relationships it'll be making - if it hasn't already.

SGH can take itself pretty much where it wants to go - and maybe has the nouse to do it.

Consider what would be happening if SGH hadn't made the move?

Same old - same old, with no prospects for much growth - much like what SHJ is experiencing right now.

Ironically, I reckon SHJ sould consider selling out to SGH - but SGH it probably wouldn't want to - no chance of any growth there.

Maybe all SGH has to do is wait - and it'll get SHJ business for nothing.

And what about the banks?

Oddly, banks are in the business of lending money.

If they're NOT lending it THEY go broke.

As far as banks go - everyone seems to have some kind of an idea that AG is going to send a sort of begging letter to the banks pleading them to not close down SGH and, out of generosity, they'll offer SGH some kind of a deal that would make Shylock look like the Salvos.

I'm not sure about that. I'm thinking that the banks have been fully appraised of SGH financial situations since last year - when they originally got into 'talks' with each other.

Certainly but about the end of Feb - at the latest.

In the few bits of info from AG I've seen, he keeps saying that all bank covenants have been kept - and that banks are fully appraised about SGH situation.

Makes sense to me.

Has anyone seen anything that says anything different. (I know the doom-and-gloomers/doomsday preppers know it's all a lie and SGH is really down the toilet - but even they can't come up with proof).

If banks are going to be worried about lending these, relatively, almost petty-cash amounts to SGH, how are they feeling about the money they lent to the miners, oil companies etc. which they're not calling in who also seem to be in mich direr straits than SGH.

I'd say, any banks considering a future with a business they're about to lend money to, (who are used to lending money to people who have none, else they wouldn't want a loan), would prefer to be dealing with a business that looks like it's GOT a future and be looking at SGH's FUTURE prospects, not so much it's history.

So ... does SGH have a future?

I think so.

In fact, I think it might be one of the few business in the world that is cleverly making one for itslf, not living on it's past laurels.

Likely others won't think the same as me - and will post things advising me what a complete tosser I am, (in the nicest possible way).

Long-term shareholders who go along may not always get an enjoyable ride.

Not with this crowd.

Whether I'm right, partly right, partly wrong or am actually a complete tosser will only be revealed with the passing of time.

As always, I put my money where my mouth is.

If I'm wrong, I'll be paying the price.


... it's fun.