Hi, I've started this thread for those who want to discuss...

Hi, I've started this thread for those who want to discuss issues to do with the Shine, and not the share price movements. I see a serious lack of intelligent discussion about the actual business of this company.

Please try to point out all the ways how Shine have problems and also things you don't really understand about the business. We shall try to debunk each of this issues and help each other as a group. Also please make your discussions educated and well researched, instead of rants such as WIP is a lie or Shine has no problems.

Any posts about share price movements and how the chart is about to look like your lovely grandmother if it just goes up one more day on a 43 degree angle, should not be here.

I will start with an issue that I think is a concern to me.

Shine does not disclose their historical case settlement success percentage which is the basis for estimating WIP. WIP is not the evil here with Slater and Shine, but rather it's how they estimate it that could be a problem. It seems like both companies have issues with disclosing past settlement data and trends.

From what I can put together with all their announcements so far, this is the most they are giving us:

From the above info, we can see Shine is diversifying into things such as asbestos cases which take significantly longer to see cashflow. Therefore more of their revenue will be booked as WIP in the future. Why are they doing this?
  
They seem to have problems competing with Slater in the PI segment. Slater has advertising scale that Shine can't compete with it seems. Slater consolidates its name in 'Slater and Gordon' brand, which allows easy advertising and promotion, while Shine keeps a lot of the law practises original name after acquisition which makes it harder for them to advertise with scale cheaply. One thing immediately we could draw from this is that in the future, if acquisition continue because they want scale to rival Slater with cost advantage in advertising and other overhead, and if they move away further from PI to other longer settlement cases, then cashflow will eventually be a problem with Shine, just like Slater now, if they do it too fast with too much debt.

WIP is not a bad thing by itself. It's like any other revenue, except it just comes long time after the work was first started. The issue really is are they overstating WIP and by how much? Profit is very sensitive to revenue movement. Since a drop a of 20% in revenue can effectively wipe out all profits due to total cost being c. 80% of revenue. Due to my other analysis, I have found that they do convert up to 148% of their cash cost (before interest and tax) into cash revenue every year, suggesting 48% EBITDA cash basis, if I use last year's cash cost as a proxy for the real cost and this year's cash revenue as a proxy for the real revenue (the details can be found in another post I did previously). So this is not a bad sign, but I would like a more detailed and ground up approach to see Shine's numbers more clearly.

I am interested in information from people in the industry, perhaps anyone who works at a law firm dealing with PI and asbestos cases that have knowledge of the 'average' case settlement success percentage and also the average labour cost/hour and revenue/length of settlement from each of these cases.