Gloom and doom scenarios are not exactly the right sort of basis for making any investments, really. We can extend the g&d scene to include the precautionary principle and the butterfly effect and then project the imagined disasters onto a number of things that we hold dear. Where and when do we draw the line?
If the opposite of irrational exuberance is irrational despondency, and despondency does hold sway, then there's a possibility that NMS sp might drop another 27c to 20c. But how likely? More likely than that of the sp going up half that amount (13.5c) to 60.5c? Furthermore, no matter how depressed the market may become, it'd be silly of investors to throw the investment baby out with the bathwater. There's always Plan B: hold until the sp recovers.
Whilst it'll be great if CL would provide additional reassuring info on NMS, but he hasn't been as silent as critiqued by a few posters. We do know the following:
1. More than $100M renewed or extended contracts as at end-Nov'09; 2. More than $50M new contracts since end-Nov'09; 3. Last FY NPBT margin was approx. 18%; 5. Profitability is heavily weighted to H2; and 4. Reduced service cost environment in H1, which might create, say, a 15% NPBT margin.
Using the unpopular FA technique, a back of envelope calculation indicates that the full year NPBT might be around: $150M x 15% = $22.5M. Is that the investment baby?
NMS Price at posting:
19.4¢ Sentiment: ST Buy Disclosure: Held
