08/09 profit and pe, page-6

They won't pay a dividend this year, and while Patersons are expecting them to pay one next year, it won't surprise me if they don't.

It will all just depend on whether they wish to keep expanding with acquisitions, or whether they think they have all the pieces in place now just to expand organically. Even with organic expansion, a dividend may be in doubt next year. As SOB correctly alluded to, there are much bigger contracts out there to be won, and neppy will eventually be in a situation where they can bid for them. What if they won a $50m contract tomorrow? I should think they would need significant cash reserves for the initial drawdown of working capital towards a contract like that.

For what it's worth I am anticipating a half year NPAT of $15m, and see no reason why they won't match that in the 2nd half, meaning a FY NPAT of $30m, which is close enough to 10cps.

If they can post those figures, then surely the re-rating will come, at least to a PE of 8.

I really do wonder about how brokers come up with their recommendations too. ABN Amro has NMS as a hold with a forecast FY 2009 PE of 4.5, yet MRM is on a forecast FY2009 PE of 7.9, yet ABN Amro has a buy on it. Would love to know how they came up with that.