affirms fy06 $6m profit est.

Bounty's preliminary final accounts look to have been misconstrued by the market. Yes they flagged a sharp increase in losses - but further reading shows this is basically the result of incurred start up costs (mainly one off in nature) and writing off $2.8m of intangible assets. So basically it is just a clearing of the proverbial accounting decks to get ready for the heady action soon to follow.

Of more significance to me was the summary paragraph on page 3:
"Bounty has continued to grow its operations at Anglo's German Creek Colliery, and has recently announced the award of a significant contract. Together with its operations at Centennial's Ivanhoe Colliery, the Directors consider that the target fo $6m net profit after tax will be achieved as forecast."

When the market digests a bit more than just the headline loss, expect to see BNT's share price move significantly higher. After all, an expected NPAT of $6m for FY06 would mena BNT is sitting on a PER of less than X4. Applying a more appropriate PER of, say, X10 suggests BNT could support a share price over 2.5 times its current level. That suggests fair value of aorund 80 cents!

(For those wanting to know more about this little gem, check out the report by Peter Strahan on the BNT web site).