potential good buy, page-56

Well, lets see...

Time to take a closer look .... heh .. their website seems down.. doesnt that inspire an investor full of confidence!

Skipping over that minor hurdle...

A few things that wont be in next half's result:
- 30m one off loss - I hope there will not be more ... if they knew now there would be more they ought have told us.... having said that, of their 650m odd cash / investment portfolio, 78% cash, 18% fixed income and 3% CDOs - of blue chips that are as yet unaffeced apparently. So if that 3% disappears, there will be another $20m loss- mind you I dont expect that to happen.

- $50m (AUD) of expenses they say they have pulled out - lets say that half of this filters through, so we'll call it $25m AUD

- 7m of one off liberty restructuring costs

- and lets not forget to take off the 2.1m loss they have already pre-announced for something or other...

- and lets assume liberty will lose another 10m...

That leaves roughly 30m we shant be taking off, and 25m - 2.1m - 10m = 13m odd we ought be adding on...

Now... what EBIT do we think they will report for the second half? Shall we reduce last years result by... 25% ? 50% ? 75%? ... lets do all 3 and see where we get to.

Seeing as I cant access their website, I seem to remember last years second half EBIT being around $90m give or take.
Adjusting it by 25% - 75% gives us a second half range of 22m - 67m EBIT.
Im going to call it at 50m - just because... and then Im going to add back in my 13m and call it 63m EBIT for the next period,

Interest is rather low - it will be 3.5m for the half tops, leaving me with 60m PBT or about 42m NPAT. Add the 26m to that for 68m full year NPAT.

68m NPAT in bad times on a company with a market cap of 433m. Thats about 16% NPAT margin - pretty good - with growth upside - and earning about 3x what you'd get in the bank, leading me to stick with my assessment that its 2-3x undervalued.

Just one little thing I dont understand in their figures... Im off to try work it out.