buying interest, page-16

re: undervalued, not overbought... t4p, yes I am on board. I have a small position only in the fully paids (500,000) as the expiry date was a bit too close on the oppies for my liking while the 'capacity upgrade' was still a bit unclear to me.
In hindsight now maybe the leverage on the oppies would have been good - to sell some and exercise the rest later. Not too late though if I change my mind - but likely to sit tight as I have enough of the portfolio in specs.

Does look good though if they maintain the turnaround and unless bad news comes out I will hold while fundamentals outlook is positive.
Below is a post to ds a few weeks ago on my thoughts on it then - and I still feel the same.

Reminds me of Nido last year - lots of traders/rampers on to it and getting out too soon and waiting for the pullbacks. Also reminds me of PRE around January this year at similar levels - lots of fun and games watching the market depth and on PRE it was hard to work out if people wanted out or in at the time (see posts on PRE) - they wanted in and it ran up quickly to 6 -7 cents.
On fundamental turnaround feels similar to JUM - took that one a long time to get noticed. However I think TOX has far more potential - could be a 5 - 10 bagger from here if things work out?



Subject to ds
Posted 08/06/05 23:48 - 157 reads
Posted by TheAnalyser
IP 144.134.xxx.xxx
Post #617093 - start of thread - splitview

hi ds,

in response to your question on the NDO thread re TOX...
Have to admit that I haven't been watching them but just did a quick bit of research and they do look like they are turning around. At first glance it looks like they started just before last xmas when they announced on 23/12.
Now they are saying that they are profitable so looks like it has got some potential - based on the numbers for first half and what they have announced since - I have not looked at what they do exactly and what the sustainability/outlook is, if forecasts are out there, who is buying etc...

The first half report in February showed that losses continued to decline and the next report if we can believe what they are saying means in profit for the full year.
Here are a few numbers...

1st half pre tax loss was approx $420K and now they are forecasting $1 net profit for the 2nd half. They didn't say pre tax but for this exercise and given past losses lets say we ignore tax - giving a profit of $600K for the full year.
There are approx 402 million shares and 95 million Jan 2006 options - so lets call it 500 million shares outstanding.

Taking $600K profit on 500m shares gives a full year eps of about 0.12 cps. Current price is 2.8 cps so this gives a current pe of about 23 (pretty cheap for a turnaround).

Assuming the trend continues and stuffing around a bit with estimates of future profit scenarios of say profits of

1. $1.5 million profit for 2006 gives a pe of about 9 on current price

2. $2 million profit for 2006 gives a pe of about 7 on current price

Also they will receive nearly $3 million in cash if the 3 cent options are in the money and they likely will be if this trend continues.

Too early yet to look at forecasting financial ratios other than eps.

As far as taking a position in the options goes - hard to say - depends on your risk profile. But might be worth the risk?
A few scenarios could play out I guess - lets say for example all goes quiet on the announcements for a few months until August half year report. What would likely happen then is that traders will lose patience and sell out if the price stagnates and then falls over this period. This being the case and the stock drifted back to nearer 2 cents might see the oppies back at 0.002 to 0.003 leading into a time just prior to the half year report? Might then be a good time to load up as a good half year confirming what they have said already will likely get interest going again in the fpo and maybe another positive outlook might make the share run towards 5 cents plus and the option well in the money prior to January?

Another option might be it keeps going up on existing news and info in the market?

I wouldn't think much chance of a capital raising between now and January.

Looks similar in potential to JUM to me. Your call though - I am not advising one way or the other.