anyone follow this one, page-2

I also have been following SAV fairly closely since May 2009. I agree with you that it appears to have a lot of potential in the ART division.

However some issues are:

a) They often quote EBITDA figures. This highlights that SAV is a good cash generator. (which is great) But the long term shareholder value and dividends come from NPAT which was a loss for the last 6 months.

b) The main problem is the FACE division and they admit that the outlook for FACE is uncertain and serious because of unknown levels of demand for mobiles. Perhaps it is a bit more serious and they may have lost market share.

c) The FACE division is in China and the increasing A$ reduces it’s value to us in Aus. They had a lot of currency driven problems in the first half.

d) The FACE division has borrowed about A$20M from a Chinese bank which has to be rolled over every year in December. If the bank was to ask for it to be repaid this year then SAV does not have the money. (There is no indication that they will ask for it back and the ART division can probably balance off the banks risk with cross guarantees.)

e) The company has on many occasions over the past 3 months told the market it is developing a new strategy to improve shareholder value, which may include splitting the FACE and ART business. They have not provided any information on why and they don’t appear to be taking any real urgent action to fix the problems.

f) The share trading has no depth because the CEO has 65% of the shares and a major portion of the balance is held by the top 30 or so shareholders. There appears to be no interest in this stock from institutions, no possibility of takeover and little scope for traders. The sp is therefore unreliable as a measure of the total company’s value and it may not respond quickly to improvements in the company.

g) The company screwed up in June and really spooked the market by advising of banking breaches which they subsequently resolved painlessly. At the time the market factored in a high risk of receivership. Although the recent half year results gave some comfort, the company has not come up with a strategy or updated outlook, resulting in only a few cents recovery in the share price.

----I am not an advisor. Do not rely on any comments!