Mega Rich/Sunbridge, actually are not short of any cash as the business has been growing steadily and generating solid cash flow.
Current debt ($4.5m) can be fully repaid within September quarter if SBB wants. Last quarter they generated nearly $6m net cash from the operating activities.
The beauty is the low cost in China, labour cost is almost 10-20% of Australia's. Rental and other operating expenses are also much cheaper in China.
To to own additional 35 stores, SBB only needs to spend $3m. Very cheap!
SBB will generate over $24m cash next 12 months without considering growth,
then cash will be approx. $51m by 30 June 2015. ($30.5m current cash - $3m acquisition of 35 stores + $6m per quarter x 4)
If dividend of 1c being declared in Sep 2014, then cash will be $47m.
Dividend yield is 8% based on 13c share price.
As projected SBB will have $47m after dividend paid. The company can afford to spend as aggressively as $30m to acquire 350 stores, bringing up 410 own stores by 30 June 2014. Then SBB distribution network will be double in 12 months. Net profit will be huge...
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