re: Ann: Greencap completes the sale of Leede... GCG seems to be...

re: Ann: Greencap completes the sale of Leede... GCG seems to be undervalued even with the lift in share price up into the 6c area. The company was, in its heyday, back in 2009 able to earn a $6.9 million NPAT and pay 0.75c dividends, since then there has been the disruption when staff defections from Noel Arnold occurred, and costs in time and hassle with restructuring. In addition there was distraction with the aborted merger with ESW.

Now things seem to be settling down and after the two divestments (Leeder sale for $12.4 million cash, and Howse closedown (with goowill writeoff)) are finished the decks are cleared to go back to a coherent business model.

NPAT for the 'core' business (i.e what is left) was $3.8 million for 2011. If we can take at face value the AGM statement that "trading performance of the quarter is consistent with last year" then we can expect at least this much profit in the current year. In addition if the Leeder proceeds are used to lower debt, then with current interest bearing debt of $12.8 million, GCG can be nearly debt free and save much of the $1.1 million interest cost from last year. It is stated that one off restructuring costs of $0.5 million would not recur further boosting the bottom line.

All in all a $4 million net with 262 million shares on issue is 1.5 cps. Should be enough to support at least half a cent in dividends. So GCG is now an undemanding PE of 4. Pretty cheap methinks.....