I've been obsessing over SGH the past couple of days, trying to figure out why people are hesitating over buying...
There are two roadblocks I see for SGH;
1) The ASIC Investigation
- Very unlikely to impact the company. The investigation (from what I understand) is looking into how they were classifying assets on their balance sheet and should not impact profit. Management have already taken positive steps to address this (correcting accounting policies & appointing a new CFO).
2) The newly introduced cap for UK claims
- Yes, it is an unfortunate event that will impact profits and I can see how this may cause fear in relation to their increased debt load, however the company's cash flows are still strong and the overall business is definitely enough to stay afloat. (see screenshot from IBIS Research).
Of course, I understand the share price is riddled with short traders and other "bad guys" but this shouldn't prevent anyone from buying at this price?
I see fields of green once this ASIC investigation is finalised.
Please let me know if I've missed something here, any feedback is much appreciated.
