profit upgrade, page-3

Very good signs here at STS, revenue up sharply, profit up sharply. Based on a NPBT of 5 million, take out 30% tax leaves 3.5 million/42.5 million shares resulting in EPS of 8.3 cents per share. NPBT is said ot be in excess of 5 million so might be a little higher as well.

I would expect continued growth in the second half to see EPS of around 10c, lets say EPS is 18c FY at a PER of 15 (sector average) $2.70 is a price target. Continued developement in overseas operations may also warrant a slighty larger PER in my opinion.

Dividends will also underpin share price strength and STS is still in a strong cash position as well. They may look to acquire and grow the company further. Entrance into ASX 300 would be a boost but we are already seeing Patersons take interest in this stock. Other fund managers will wake up to this success story very soon as it is a good small cap for boutique funds. Still very illiquid as a stock but allows moves to be sharp when it does go. For now uptrend is restored and we can expect to see more rises after good announcement. May be a good time to accumulate as last time it upgraded profit it sat at $1.20 for a month before it moved. It may sit near $2 for a while. Time will tell. Either way will be above $2 in good time.