It must have been a rewarding and vindicating day for most of you on this forum yesterday. Well done, all!
I have no doubt that the rights announcement will be very well received when it comes, although it will be interesting to see what will happen when the new shares start trading. No matter how promising this company is, there has to be a number of shareholders out there who were stretched over this rights issue, and will be happy to take a quick return.
On the issue of the new shares I did some back-of-the-envelope calculations with regard to market capitalisation.
Pre-Rights there was some 397 million * shares on issue, so at 1c the market cap was $4 million
Post Rights (assuming 100% take-up) there’s 715 million, so at yesterday’s last trade SBN has jumped to almost $13 million
It then gets interesting with the options, as they will kick in if (when!) SBN stabilises over 2c. Roughly, it looks to me like
2.0c 14.3 million 2.5c 18.6 million 3.0c 23.0 million 5.0c 40.5 million
The big issue, and this relates to what a number of you have been saying online, is that discounting the sentiment aspect, SP growth needs to be under-pinned by revenue.
Since I’ve been away from this end of the market for a while, I’m curious to know what people think the market can take in terms of company valuation/ pe, for a small cap stock like SBN as it starts to move into positive cash flow?
* please correct any of my figures if you think they are wrong. I am just interpolating from the rights issue letter to shareholders
SBN Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
