08/09 profit and pe

Hi all,

Looking at current revenues and expected revenues to come in the second half of the financial year, it appears likely that NMS will meet or exceed it's forecast of $22-$24 million profit. (Guidance taken from announcement 20/11/2008 'AGM CEO and Chairman`s Shareholder Address' page 3)

If the share price stays where it is now (equating to a market cap of about $100 million), that would have us on a market cap of about four. If you think such a company should be trading at a PE of 15, then the share price should be (15/4x30c) $1.15, or almost four times higher than it is now.

As I said, we only have to maintain current earnings guidance (which appears conservative) to be on a stock that is currently trading on a forward PE of four. Safe place to park your money for the next few years imo.

Whilst NMS may not be re-rated to a PE this high, it's assuring to see that the SP has some way to climb before it starts to look like fair value, let alone pricey.

From same announcement: 'The underlying value in the business and indeed any future potential is not reflected in the current share price. Markets always recover and the long term story remains an excellent one. The company is financially very sound, it has multiple avenues for growth, and it is in a sector that is not subject to the same supply and demand dynamics as other commodity related sectors. We remain confident that the company’s best years are ahead of us.'

Cheers