Yes, to the credit of the company's managers, they have been transparent over recent years and are managing expectations well, so while the second-half result was indeed soft-ish, it was already well-flagged to the market.
And you're right, the outlook statement smacks of them trying hard to contain their confidence in the next two years.
What pleases me, in particular, is the investment they have made into the business (more than $5m in the past two years, which is more than 10% of the value of the company) in terms of enhancing the capability to respond to the demand wave that is coming.
And then there's the following favourable dynamic, too, as extraneous factors that were headwinds in previous years - such as high power costs and high raw material prices (especially zinc, the key ingredient in the galvanising process) - ease, to become tailwinds:
At the peak of the commodity infrastructure boom, KOV's EBIT peaked at $9.2m (FY2012).
Today, it is a much leaner, more efficient operating business: I fully expect the company to, at some stage over the next 3 years, to record a $10m EBIT number.
When and if that that happens, the chance of the company still having an Enterprise Value of just $40m, is - I argue - zero.
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KOV Price at posting:
$4.30 Sentiment: Buy Disclosure: Held
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