The only problem I now see with all these assets sales, is where will profits come from three years down the track? We're shutting down half of the business, and future profits are certainly looking slim.
6 months ago, my expectation was that FKP would be split in two: Retirement and non-retirement.
The non-retirement half, much of it for sale, would be priced at book-value; this looked like having plenty of upside.
The retirement half would probably have been valued against its income. With a retirement company with (about) half the current MCAP (after the split); lets say half the current SP to keep the maths simple, the valuation of SP/MCAP against retirement income was looking pretty good.
But now ... we've had a write-down of $180M in the "for sale" assets, and the company is not being split. So with a SP of $1.60, how will our valuation against retirement (only) income be looking 3 years from now? Forward PE looks pretty tragic.
I'm still holding .... The numbers are looking pretty good for FY14 profits. But I'm very uncertain about the future ....
FKP Price at posting:
$1.42 Sentiment: Hold Disclosure: Held
