In terms of fundamentals how is this a risky stock? For what reason is a profitable company (and if we believe Grech, one that is currently cash flow positive) that has hit guidance since its listing and made EPS positive acquisitions trading on forward P/E ratio of 1.5? In terms of the accounting error, it was INCREDIBLY minor and had no net effect on the position. It looked like something caused by not checking a spreadsheet properly on the computer. How can we look at the error Pukin raised from Morgans and laugh about it and say "oh well, sh1t happens," but when a single one is raised by SGH it is assumed their WIP is worthless and they are going broke? Does anyone realise how ridiculous this sounds? The ASIC issue regards an investigation that isn't the result of wrongdoings, but rather a standard, recurring look into a company (as with probably another 70) to protect shareholders from companies deliberately or negligently behaving badly.
The problem with this stock at the moment and the only fundamental "risk" I see is that no one has the brains or the balls to simply look at the facts in the face and realise it's a $7 stock that has been priced for the apocalypse. There are too many profit takers and day traders making it impossible to get off the ground. Unfortunately we need results, and I don't think the share price is going anywhere until ASIC get off their asses and we get to half year reporting season.
Just a point on something I have noticed here, I have seen a lot of talk about valuations with models based on lagged EPS (to make up for lagged cashflows) and people talking about the current P/E ratios, but in this case it makes absolutely zero sense, especially when they are happy to talk about about the debt not being serviceable based on lagged figures. This is a company that just made an acquisition that they still maintain will be EPS accretive in the short and long term; additionally fy2016 profits will supposedly be double that of fy2015. Why are we only thinking in terms of fy2015 figures?
Oh, and how about the fact this stock dropped from $2.50ish to 60 cents at one stage due to news that the company maintain with have negligent effect on their business? Does this make sense to anyone or am I missing something here?
