I reckon this stock had a lot of speculators in it. If you look at the chart the price started to fall not long after the Pyramid Asmara deal was announced. I'd say the companies share price is deal driven. It is not really driven by fundamentals. However I think you can see some good fundamentals emerging. Just look at these figures. '07 figures will come out in December or January I assume and '08 is the companies guidance. Forget about Paterson's Securities. Those guys are full of sh... They just want to sell shares in the placements so they'd say anything...scomebags. But anyway here are the figures. Revenue (06) $29m (07) $122m (08) $242m Profit/loss (06) -$17.1 (07) -$19.4m (08) $30m
The story is that they have postponed profits by selling low margin products in what they call a "land grab" in order to get paying customers. Up to now they have been selling wireless receivers at a 10% margin. The big money is in tranfer devices where they hope to make 35%. If you you look at the revenue figure it has gone up by $93 m and the loss for that period is only $2 million up on last year. So that says something...loses are are slowing. According to the guidance for next year revenue is going to increase another $100 mill and profit for that year will be about $30 m What is the margin then? .... 12% I think they will probably get that. (10% margin on receivers...35% on tranfer devices 12% looks like it could come out of that lot.) In addition they have managed to increase revenue from '06 to '07 by 320 % and from '07 to '08 they maintain that they can increase revenue by up to 98%. What do you think? Possible? 320% this year 98% the next...mmm probably likely.
I therefore buy the story.
Also I think Macquarie Bank may still buy the story as well. They are supposed to own 7% of the company and as far as I can see. I wonder why they are not buying more? Probably for the same reason I am not getting any more .... lol Anyway, if that is the knowledge out there then perhaps we are looking at an undervalued situation. $30m is .28 a share. On a forward PE the company is trading a bit more than 5. If the company should do as it says then the PE should be obviously be much higher - 15 at a minimum wouldn't you say. Paterson wan...s say 17 but forget about those con artists. But base on what I am saying the company should be trading at $4.20 It is only 183% undervaled...lol
