NPAT includes a heap of non-cash depreciation and amortisation,...

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convexity

10,652 Posts.

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17/10/22

16:36

Post #: 64238835
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Originally posted by James7821: ↑

For me it was yes. I think management are lousy, and it has a weak balance sheet which is getting worse instead it should be getting better during this part of the cycle (risk management).

The latter point was the final straw for me. In an environment with stable margins and no looming deep recession coming expanding debt to grow assets is fine, but we are in a bad environment and yet the balance sheet has instead blown out. When you add substantial pressure to margins, and a looming recession, you have a disaster waiting to happen. NPAT is extremely delicate in the best of times. Look at its NPAT and compare it to its market cap, it's not that cheap. It looks even worse when you look at its cash from operations (ignore that worthless EBITDA metric) and compare it to it's EV (i.e. after debt added on top of market cap).

This company is 1 step away from totally screwing it all up, and getting bought out by a Chinese conglomerate for a fraction of the current price.

I had a bugger all sized holding in it, so my personal interest was always relatively low, but I know it well enough to see where its going

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NPAT includes a heap of non-cash depreciation and amortisation, who cares.

Even after today's announcement it trades at Net Debt / EBITDA of about 1.5x and that is projected to quickly decline below 1x.

I am more so saying this with a bit of humor... but if 1.5x Net Debt / EBITDA concerns you, perhaps term deposits are the way to go... No debt issues here.

I got in at this level today.

Last edited by convexity: 17/10/22

CGC Price at posting: $2.00 Sentiment: Buy Disclosure: Held
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NPAT includes a heap of non-cash depreciation and amortisation,...

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