Back from the brink for BLY. At 15 cents it was priced for...

Back from the brink for BLY. At 15 cents it was priced for bankruptcy. Now with a 1 for 1 issue, another 1800m new shares have been issued (the bulk of this completed yesterday with the instos). Another placement of $230m hopes to be raised from 24th September plus the retail offer. All of these new shares will take digesting as the number of shares in issue more than doubles to 4,580m. Remember as an insto shareholder you can now sell old shares in the market as you know what you got in yesterday's placement. Hence selling pressure.

Back to fundamentals. BLY is now out of bankruptcy mode and fully financed with a very serviceable debt. EBIT interest cover will cover debt by 2x this year but this will rise to 10x in 2010. Very manageable.

In terms of valuation, Bell Potter have EPS of 1 cent for 2009, 2 for 2010 and 3 for 2011. Based on a price of 30 cents, then the 2010 PE is 15x and 10x for 2011. Is this cheap?