NCK 0.06% $15.41 nick scali limited

NCK doesn't need to do much at all to make the business...

  1. 167 Posts.
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    NCK doesn't need to do much at all to make the business profitable. Its all about the GM, fabb is 1/10 of NCK. The group (NCK + fabb) will have significantly more buying power than Fabb alone and they will improve the GM. They don't need to do anything else, no price increase, no efficiencies etc. By improving GM from a dismal 41% to a very modest 55/58% they will generate A$10m in profits, all else being equal. It's a scale business, everyone selling the same things, if you are big you can negotiate better prices from the manufacturers, that means higher GM.
    A return of $10m on a $50m additional capital is not what NCK aims to hough, they will work hard to reach at least $20m out of that additional capital. And it can be achieved, it's not rocket science.
 
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