SGH (ASX) Price action?

Originally posted by ChristopherC ↑

Hi All Slaterians,

Yes Christopher is still holding (just). I do have a sell on the shares in my personal account , should it recover a bit from here, and will take advantage of a nice little Capital Gains Loss, to offset other profits, but I am keeping my larger holding in my super just in case banks do decide to kick the can down the road a bit or take a haircut debt for equity deal that will save the company from drowning in its own debt.
But seriously this is a punt at best and i wouldn't be doing it if my other parts of my portfolio weren't performing amazingly well ( gotta love MQG). So please heed the caution in most posters deminure. I wish i had done this sooner. But i do think there is a chance banks will support SGH, mainly because most of the tough work has been done and with a reduction in spend on restructuring, cashflow should come back into th
e positive in the short term. My only fear is cutting out the cancer may have caused some haemorrhagging that in long term could be fatal.

Good luck all Slaterians.

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"My only fear is cutting out the cancer may have caused some haemorrhagging that in long term could be fatal"

I think everyone was thinking that from Jan 2016 forwards SGH would start its recovery back to some level of financial health, though obviously it was going to be a long slog.

And the results for the 6 months to Jun 2016 did show considerable improvement over the 6 months to Dec 2015.

But if you look at the results for the 6 months to Dec 2016, it's pointing to a terminal situation - which can't be explained away by the small level of seasonality in the group's performance.

Comparing Dec 2016 half to the Jun 2016 half, they had a loss (before impairments) of $56.4m in the December half, compared with $56.8m in the June half - so much the same result.

While there's obviously some lumpy non-recurring items in the December results, the 2017 1H loss was on a much lower turnover - down 23% in $A terms in the December half, so it's pointing to lower levels of net earnings (or higher levels of losses) as a percent of revenue.

All of the main indicators for financial health were either the same or worse in the December half compared with Jun 2016.

It looks like all 3 businesses have suffered some serious damage in the second half of calendar 2016.

Even if SGH did not have $700m+ of debt, it would still be a company with a question mark over its future.