"But that's the market for you."Tis the way the wheel spins in...

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Baggedem

141 Posts.

81

12/10/21

13:51

Post #: 56738975
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Originally posted by madamswer: ↑

Lockdowns in NSW and Vic delivered this stock to investors at a lower price than would ordinarily have been the case.

Which makes little sense because it must surely be known that lockdowns would end at some stage.

But that's the market for you.

As sure as night follows day, that irrationality will have evaporated, to be replaced by great enthusiasm for the stock between now an this time next year, when we will see explosive growth in Revenue and Profits.

That growth will not be driven just be a re-use of the 800-odd terminals (about 10% of SMP's fleet) currently idled due to businesses shuttered due to lockdown, but also due to continued roll-out of new terminals.

But there is a third tailwind - which I don't think the market fully appreciates - and that is that for SMP's terminals which have still be in use over the lockdowns, the revenue per terminal will have been meaningfully reduced over the current six months due to generally lower overall economic activity in NSW and Victoria.

It stands to reason then, that there is a not-insignificant amount of pent-up consumer demand which will result in revenue per terminal re-bounding to levels higher than where they were prior to lockdowns.

So that's the additional tailwind sleeper for SMP.

Summarising all of this:

The upcoming SMP result (6m to 30 Sept 2021) will not be a pretty one, for the reasons discussed above.
And while the second-half result (6m to 31 Marc 2022) will be somewhat better given NSW has opened up (although who knows what the timing of Victoria's release from lockdown might look like), it will still not be great.

But the subsequent results - particularly the one for 6m to 30 Sept 2022- will be nothing short of stellar.

In other words, the reason the upcoming results will be weak is because the ensuring ones will be very strong.

And we won't have to wait until this time next year for that to become evident; there will be numerous updates confirming it long before then.

.

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"But that's the market for you."

Tis the way the wheel spins in micro-cap land.

And until investors see the actual statuary profits/cash flows from the horse's mouth, I'd bet SMP continues to trade at a significant discount to it's intrinsic value.

As you mentioned, the 6m to September 2021 results will be ugly and I wouldn't be surprised to see the stock sold off to some extent thusly providing an ample buying opportunity for those investors who are willing to be patient with their wealth creation.

SMP Price at posting: 79.0¢ Sentiment: None Disclosure: Held
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Last $1.16		Change -0.005(0.43%)		Mkt cap ! $279.6M

Open	High	Low	Value	Volume
$1.19	$1.19	$1.15	$188.3K	162.6K

Buyers (Bids)

No.	Vol.	Price($)
1	1933	$1.12

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Price($)	Vol.	No.
$1.16	5998	1

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No.	Vol.	Price($)
1	1933	1.120
3	16900	1.110
1	2000	1.100
1	1834	1.090
1	550	1.085

Price($)	Vol.	No.
1.155	5998	1
1.160	8955	1
1.200	16876	2
1.250	20000	2
1.300	14402	4

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SMP (ASX) Chart

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