How astute is REF chairman, Peter David Ritchie?Ritchie,...

How astute is REF chairman, Peter David Ritchie?

Ritchie, previously founding director, CEO and chairman of McDonalds Australia, stepped into the REF market on September 2 and bought 490,000 shares at around $0.04.

Some three months later - at today's the closing price of $0.08 - Ritchie's purchase is showing a return of 110%.

There are other things I admire about Ritchie and his board.

. REF reports conservatively. Twelve months ago it issued guidance forecasting a first half EBITDA of $200,000 - $300,000. Two months later it reported audited EBITDA of $388,000 - 30pc above guidance.

. REF runs frugally. It has no debt. Current cash at bank if $3.6m.

. REF is simple to understand. It has a monopoly on reverse charge calling, it is the second largest pay phone operator after Telstra and it is a top-three distributor in the $71m Australian contact lens industry.

Given the latest guidance of December half EBITDA being in the range of $0.9m- $1.0m, I wouldn't be surprised to see an audited result nearly treble that for last year's corresponding period.

REF's market capitalization is $5.82m. Enterprise value $2.22m.

With today's closing price up 27pc - and barchart.com's 100pc buy advisory - I expect the re-rating to continue.