good times ahead, page-15

footsie,

Whilst I was not 100% impressed with the recent results, they were not that much lower than what was expected by the market.

I suggest you take a closer look at the numbers before you talk about 'poorly performing acquisition'.

Yes margins were down a little from 33% to around 31%, but revenue was up a whopping 50%, and EBIT around 40% after taking out the accounting adjustment.

Also bear in mind that the SDM acquisition did not take place until 1 January 2008 so was not included in the figures.

If 2007 was anything to go by, full year profits will be around 2-2.5 the half yearly so that should see NPAT over $20m before the SDM acquisition is included.

So we could potentially see $22m-$24m .

That puts them on a PE of just 11 to 12.

Historical market average PE is more in the range of 13-15, plus you need to consider that their above average growth in recent times warrants a much higher PE.

08/09 will include a full year of SDM results, Adelaide office would have expanded significantly, etc. etc.

Factor all that in and I anticipate a NPAT to be at a minimum $28m in 08/09.

At a PE of 14, that's price target of $3 which is where we were last year.