Its just that nobody else seems to. If they hit the mid-range of their half year guidance they'll make 6.7 cents per share. With the price at 26 cents that's a 25% earnings yield (18.5% return on equity), which would normally warrant a much higher share price, however, FSA Group seems to be abnormal. It just sits there cheaply, day after day, without anyone seeming to take notice.
And I can't see things changing quickly enough to warrant a change in sentiment anytime soon. They announced today an increase in the home loan facility from Westpac, so they've now got enough to build a loan book up to 310M. It seems the banks will only lend to them in small increments. I worry that they tie it the equity in the business, but even with FSA retaining all earnings and getting close enough to 20% compounded return each year, its taking ages to ramp up the loan book size.
Am I foolish to think a suitor might come along and pay a more reasonable price for the whole firm?
I consider myself a patient man but this is testing.
FSA Price at posting:
25.5¢ Sentiment: Buy Disclosure: Held
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