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$3.34 silk laser australia limited

interesting analysis i have been watching this one a bit - CEO...

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Pastry1

1,711 Posts.

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07/12/22

20:10

Post #: 65205720
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Originally posted by Ragnarolf: ↑

Well that would get down to how you value this company.

Cut through all the glossy pictures and models and this company made 6.4M Net profit after tax in FY22 and it currently has a market cap of 105M. That gives it a price earnings ratio of or PE of 16.40. Now if you choose to define this company as a "growth stock" and feel they can achieve a 25% uplift in profit PCP year on year. Then one could argue the stock was cheap and undervalued.
If how ever you feel that is not achievable and the current profitability approximately aligns to the ongoing underlying profitability. Then one could argue the company is overpriced and still has some way to fall.

Having a quick thumb through the annual report a couple of things that jump out as a concern me about this company

Gross profit was 42M plus they collected 13.5M in franchise fees. Call it 55.5M in net revenue. Employee wages was 27.3M or 49.1% of net revenue. Which to me seems their margins are too skinny (but that could be typical of the health and beauty clinic sector)

On a cash accountant bias they netted 9.1M cash after operations before tax, off the back of 81.3M in reported revenue or 11%. What would happen if sales slow up because of a recession? If managed get he balance wrong, they have lots of fixed costs the company could quickly flip to a loss.

The CEO and founder received $728,237 in total remuneration in FY22 for delivering $0.12 earnings per share while the stock price more then halved.

Circling back to PE. Its just one quick and somewhat crude way to value and compare companies. Its not the be all and end all, and there are may other ways to go about. BHP current has a PE of 13.5 and currently pays a dividend. Repeat the exercise with the top 10 companies on the ASX who carry much less risk. Why would anyone buy SLA at $1.98? I cannot see why unless you feel this company is about to make a boat load more money in FY23

**Investing in shares comes with inherent risk. Do your own research before making investment decisions. The above is my opinion and thoughts only and is not investment advice.

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interesting analysis i have been watching this one a bit - CEO Martin Perelman currently has 2,813,398 shares directly or indirectly i dont think he has sold a single share [time of posting i could be wrong]

thus paying himself over 700k is fairly odd as he has lost over 1m in stock price 'value'

this probably is a 'growth' stock but at the same time the current market is not great for growth - right now people want profitable dividend paying companies - i think this could be a decent long term hold but it will require a lot of patience - the company needs to give back to share holders via dividend if it wants to put a 'floor' on the price till that happens i think we could see this drift lower

SLA Price at posting: $1.95 Sentiment: Hold Disclosure: Not Held
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