- Australian paper business is in structural decline like the rest of the industry. The company strategy has shifted towards the diverse earnings model, which is obviously the right way to go. They have a good thing going in NZ and will probably be replicated in Aus.
- I agree their explanation for negative cash flow is a little difficult to understand. Important to note that they took a decent haircut from their exit from Europe circa $7 mil, ie. one off. They should be able to turn this around this half.
- The new strategy has promise with good margins being achieved. As you say they need to cut back on the overheads.
PXUPA have no rights in terms of redemption, as they've now gone perpetual. Holders are stuck between a rock and a hard place, as they need a change of control event to realise any value in the PXUPA (not likely at this stage).
Best thing to hope for is that the company keeps growing, deploying its capital intelligently until such a time when the PXUPAs can be repurchased and the capital structure cleaned up.
SRS Price at posting:
3.4¢ Sentiment: Buy Disclosure: Held
