A big day for STS - up 25% following the market update...

A big day for STS - up 25% following the market update confirming NPAT for 2010 will exceed 1.5 million and the intention is to reinstate dividends.

While STS clearly has a lot of hard work ahead, as per my previous posts I do believe it is still significantly undervalued. Now the Framework business has been disposed they can focus on the profit generating businesses.

Without going into too much detail - NPAT exceeding $1.5 million includes losses related to the Framework business of $7.5 million. Therefore it is reasonable to expect NPAT for future years (given work on hard is still at similar levels) to be approx $10 million per year. Not bad for a company currently only valued at $28 million!

However investor confidence has been knocked out of STS, and this will take time to recover. Still a good day and pleased dividends to be reinstated.