thinking on paper

Based on the information listed below:

Nylex said first half of 2006 profits might be 70% below same last fin.yr
30% of $12.6m=$3.8m

minmum normal profit for 2006 fin. year is:
30-40% reduction of $20.1m= (0.7-0.6)$20.1m=$14.1m-$12.1m
The Australian article said Citigroup said $10m for 2006 fin.yr, that is worse .
And $16.8m for 2007 fin.yr.
based on a P/E ratio of 13 gives:
a share price of 13x($14.1m-$12.1m/1011 shares)=13x(1.4c-1.2c)=-18c-16c per Nlx
a share price of 13x($10m/1011m shares)=13x 1c= 13c for 2006 per Aust/Citi
a share price of 13x($16.8m/1011 shares)=13x1.7c= 22c for 2007 per Aust/Citi

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NYLEX EXCEEDS ITS UNDERLYING PROFIT FORECAST FOR 2005
Directors of Nylex Limited today confirmed that the Group had exceeded its forecast range of $17-19 million for underlying net operating profit after tax (NOPAT), for the year ending June 30, 2005.
Earnings Before Interest and Tax and the impact of divestments and writedowns rose 55 per cent from $22.4 million to $34.7 million, following stronger performances by our major operating divisions during the year.
Before the impact of divestments and writedowns, the group’s Net Profit After Tax showed a dramatic improvement to $20.1 million, from a loss of $4.8 million in the previous year.
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The Directors of Nylex Limited today confirmed that the Group was ahead of target to achieve its forecast earnings range for the year ending June 30, 2005 of net profit after tax (NPAT) between $14.4 million - $15.7 million, before considering the impact from divestments.
The interim result (before actual and planned divestments) is a Net Profit After Tax of $12.6 million, following a stronger performance by the majority of the Group’s continuing businesses and lower than forecast effective tax rates, which are likely to continue for the immediate future.
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OUTLOOK.
In terms of the outlook, for the reasons I have outlined, pre tax underlying earnings in the first half could be up to 70% below those of the first half last year. However, as bleak as this sounds, second half earnings should see a much improved situation. Even taking into account the absence of earnings in the second half from the sale of AH Plant, pre tax underlying earnings are expected to be significantly greater than in the second half of last year. Current forecasts suggest a full year pre tax underlying earnings deficit of 30% to 40% compared to last year. However, going forward, a successful implementation of the current range of acquisition opportunities should materially reduce that potential deficit.
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