I have always found HC to be very good for getting a feel of investor sentiments but very poor for actual FA! So basically this is my take on HIT...
They always had a pretty decent core business, but never got the correct multiples for it, and the reason is, they always had this weird strategy of investing in other ASX companies. This changed recently, they indicated that they will moving away from this and be focusing on their core business! Which is what they should have been doing all along!
This renewed focus is starting to show through the results, they doubled their revenue in the last 12 months (abeit you have to strip out some write offs), but NTA is sitting around 12c per share. There's no debt and EPS of around 5c per share.
Their revenue source is pretty stable and chunky from government streams - there's definitely quality here. And on my numbers, I'm forecasting EPS of 7-8c per share for FY15/16
So in summary:
Current Share Price 23c less NTA of 12c = EV of 11c
Current EPS 5c, means trading at ~2x P/E
Forward EPS 7-8c, means trading at ~1.5x P/E
Where is this going? Comparables trading between 8x to 17x. I think this is going to a dollar in the next 12 months.
The macro environment for their industry faced a lot of headwind recently but that seemed to have died down... so looking positive!
HIT Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
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