valuation catalysts

Hello,

I know this forum is generally not the place for fundamental analysis but I am interested in hearing what you guys think of BKN. I'm going to lay out the positive and negative catalysts that I see for the stock in the short-medium term:

Positives:
a) Heavy selling pressure stemming from one off event (Court ruled against BKN in the bid-rigging case) creates relative underperformance versus peers in the ST. The judge ordered that BKN make a one off payment to Pala Investment Corp. of $22.4m, BKN has filed appeal documents.
Assuming the worst and BKN fails to win on appeal, the ruling does not impair BKN's earnings in later periods.

b) Today's selling pressure would appear to stem from UGL's profit downgrade. UGL is more exposed to CAPEX cuts from the miners as its business is not as diversified. BKN derives a significant proportion of its revenue from consumables. Miners may cut back on heavy services as exploration slows, however, consumables are a neccessity to maintain and expand existing operations.

c) BKN is paying a healthy yield above 8% at these levels. Even if NPAT comes in 10% below FY12's result, dividend yield above 6% can be maintained. Hence, I expect the SMSF army to come knocking on the doors at these levels. And everyone knows that these guys do not sell for tax implications.

Negatives:
a) Miners cutting back on CAPEX. This will definitely slow the rate of growth in BKN consumables business, but it has yet to be seen if the cuts will actually erode profits in this area. Given that in February BKN reported a +10.2% in YoY profit before tax, selling on this point is pure speculation. It will be of interest to note that the mining products business experienced significant growth (approx. 10%) over this period.

Disclosure: I am long BKN.

Any thoughts from the shorters out there? I would like to hear some views to the contrary.