Here is some feedback on SWT with regard to pricing it.
To the best of my knowledge, the share price for an established, profitable company is by and large, based on averaging, their most recent full financial year profit plus the next two years forcasted financial result. There are other considertaion like NTA, etc.
Brokers then typically add a weighting, either negative or positive, to this average, based on whether they believe the company/management team can deliver over the next two years.
For company's like SWT, forming an accurate share price, is very difficult as they are not established and to date haven't been profitable. They have forecast a $1.40m result to June 2004 and currently I am not aware of any guidance they have issued past that date. To date, certainly in recent times, I am not aware that SWT has posted a profit.
What the market is aware of is that the ADSL market is growing rapidly, that SWT is growing faster than most of their competitors, that SWT has solid customer satisfaction, that the SWT board has been strengthened in recent times to include New Zealand directors who have prior exposure to the Telecom market and most importantly that SWT has a low cost base. In ADSL business terms, currently SWT have a very good story.
What we do not know is how SWT will perform with increasing competition from the likes of Optus and whether larger established players, like Telstra, will adopt "below cost" strategies to stifle the grow of new players. We don't know if SWT has any skeletons in their closet and we don't really know how the other parts of their business are travelling.
If SWT continues as it is presently, then it is reasonable to expect that there is substantial upside in their share price and there needs to be, because based on their current situation, SWT would be considered a high risk investment.
I am a large holder of SWT and naturally I am hoping that there is a positive risk/reward outcome with this stock. If there isn't then I will be eating humble pie for quite a while.
If anyone believes that they can accurately put a share price on SWT, I would be very interested.
