what next for cmi?, page-5

hemphill,

This is a tough call. Management arent the best in the business and the SP trades at a discount as a result.

TJM has been in restructure mode for 3 to 4 years and has yet to return to profits. When the leadership realise that you cannot grow yourself to profitability (busy fools syndrome!) and that you need to corrcet your cost structure and turn a profit before you grow TJM will continue to under perform.

As for the electrical business, the mix has really hurt the businesses profitability, but having said that a good management team would have made the necessary changes to hold profitability.

The full year results will be down on prior year by around $3m so the shares trading in a range between $1.50 to $1.80 is not out of the question.

The real question is whether the board is open to a corporate transaction which will release value for all shareholders, I am still hopefull that the board may utilise cash and franking credits and pay a special dividend to get some money off the table.

I dont believe the SP has reflected the bad news for the half with my estimate of the earnings to come in at around $3.1m to $3.5m down $3.5m to $3.1m Vs prior year. Once this comes out the SP might take another hit. Anything under around $1.40 is a bargain.