Difficult to tell fair value at this stage, yes CFP so ongoing concern? It sounds that business is ticking along and there is a bucket load of potential but the thing that I find concerning is the more than halving of product and manufacturing costs. Cash received has gone down as well as manufacturing costs ($7.3M in June quarter $3.1 this quarter), this can be attributed to getting rid of unprofitable business but also big stockpiles in raw material. If Pegasus is ramping up big time then I would have thought manufacturing costs would have taken a hit (unless due to the lag the chemicals / raw material were all purchased last quarter and the cash not in yet, with the lag time is quite possible). Being optimistic and assuming big growth in profitable business this year, from this quarter let’s say profits were $1m so rolling estimate to be $4M, 10-15 times EBITDA would be MC target of $40M-$60M. If there is good business traction going foreward you could say profits per quarter by Christmas of $2M then you can double the $40-$60M and by the end of the fy, a $10M profit is possible so a comfortable MC estimate of $150M. Company still has to prove itself for me to be interested as I feel there sp is still half way through a big hangover from the parties of the last few years.
AJX Price at posting:
37.0¢ Sentiment: Sell Disclosure: Not Held
