predictions for tomorrow, page-10

I have had a reread the announcement today and can see a bit more clearly where Paul Dagliesh is taking the company. It seems to me he is looking to maxmise the percentage of profits to revenue. If he can do it and the market seems to hold the same view as me, then we are on a winner.

Based on that say $550M revenue (and this may well increase), at a profit margin of say 10% this equates to $55M profit and a NPAT of say $38.5M. I would describe this level of profit margin as average and it should be doable. Current market cap at 90c is about $112M. Comparing that level of profit to the current market cap and you have a PE ratio of about 3. That wont last for too long I wouldnt expect. Hypothetically, NPAT of say $38.5M then you should be looking at an annual dividend of say 12cps (based on 5c for $18M). This in turn should equate to a share price target of about $2.00 or a touch more in a steady market.

Thats what they are aiming for and they need to do a lot of work and a few announcements before then, but for the time being I think this will steady around a $1 or $1.10 if we are lucky.

With such low volumes trades (usually) you would be mad to short this and regardless I think it is under the market cap threshold for shorting. You may only be about to do it with CFD's anyway. If they start to make announcemements about new contracts, you dont want to be holding short positions. With that said I wont condemn you if you try, you may just move it to a price where I and others buy a few more. Having bought these at mid 30s I well into greenfields.

Cheers