I have only had a brief look at SEN bris but it is my opinion...

I have only had a brief look at SEN bris but it is my opinion that you are looking at SEN from a very optimistic angle. I agree with you re the dividend yield and the likely cushion that will provide but I'm way higher when looking at earnings multiples. You may be technically right but I prefer to look at things in a fashion that is comparable to past and future years and avoids one offs.

SEN are one of those annoying companies that talk "earnings" and sometimes mean NPAT and sometimes mean NPBT/EBIT etc...........etc........ and in their case if you want a realistic look at their earnings multiple it is not a simple case of annualising the first half. Better to look at their predicted outlook and make a few adjustments IMO. Numerous times (incl the April presentation) SEN have said that their NPAT for this year would be around 9.5 million due to tax consolidation rules (once off benefits) BUT their underlying earnings would be a profit BEFORE tax of above 7 mill. Let's be generous and say 7.5 m.

I generally like to assume that companies pay tax @ 30% for the sake of consistency with future figures - SEN's tax losses yet to be brought to account are running out fast anyway so I think this is the right thing to do . That's my personal preference anyway and avoids the sudden shock when a growing company suddenly posts a drop in EPS once they start paying tax..

So we have a NPAT of 5.25m which using a diluted figure (using SEN & SENOA) we get EPS of about 1.13c and a PE @ 25c or so of 22.

Doesn't look quite so cheap now does she? May be about right/decent value given the growth prospects but not dirt cheap by any means .

This isn't the only way to view it ofcourse but I believe gives a more realistic view of where they're at in terms of valuations and clears some of the confusion in the way they present their figures.

Cheers,

Ed.