Thanks lost com for not attacking me personally like most of the others. You were there from the very beginning with me when I started to investigate this company due to it's low market cap.
I will give the basic reasons to why I switched.
Firstly let's talk about price, both is very cheap:
1. Slater has enterprise value (EV) of 800mil, i.e. you can acquire the whole of Slater at current market price for 800mil adjusting for debt. They produce 150mil normalised earnings according to my assessment.
2. Shine has EV of 100mil, 8 times less than Slater. They produce 35mil normalised earnings.
Tell me which one is the better deal even before I adjust for risks. Pay 800mil to get 150mil a year or pay 100mil and get 35mil a year?
One thing going for Slater is that their 800mil EV contains only 200mil of market cap and 600mil of extra net debt. Slater therefore is a leveraged bet, hence will pay off slight bigger if you are right versus Shine, which has little leverage. I can't be bothered doing the maths here but if you don't trust me research up the theory of EV. The problem is that if you are wrong, Slater can be bankrupt faster than Shine too.
Risk wise:
1. Slater has huge issues with inconsistency and trustworthiness. According to their past data and info they provided, going bankrupt is near impossible. However, due to Slater's inconsistent behaviour, i.e. not disclosing their cash position recently being the most 'fishy'. They don't need to audit cash in the bank. It's a two minute job to disclose.
2. Shine has tiny debt level compared to Slater as I alluded earlier. No matter how bad they do, they will not go bankrupt. Only problem with Shine is that can you trust their current WIP earnings. But even if it doesn't, then they still can't go bankrupt due to no debt. Also they haven't really lied or being inconsistent yet. They wrote off WIP in a very timely manner, unlike Slater.
So therefore, Shine is both cheaper and safer than Slater with both at 60cents a share. I never considered Shine before because they were way more expensive than Slater at 2+ dollars a share, which gives them an enterprise value of 350mil, hence ten times earnings versus Slater's five times earnings at around 60cents.
However, Friday's irrational sell off by Shine's stock holders and Thursday's lack of disclosure by Slater pretty much sealed the switch for me. I still have a tiny position in Slater, but that's not something that I can lose sleep over.
Of course Slater can still survive, but it looks increasingly like they are lying about the numbers. The numbers might look good, and I have went through the numbers multiple times, probably more than most people here. But it doesn't do anything if they are lying about the numbers. The 100mil headroom, if real, can't put them in such a position right now. Firstly they did not disclose on Thursday their cash position, and now this.
"FTI was involved in the
bankruptcy of Lehman Brothers[2] and
General Motors bankruptcies[3] and the investigation into the
Bernard Madoff fraud." - Wikipedia
For your information, Slater have most likely 'lied' about their 'routine' ASIC investigation too. I found out recently that there was no such a thing due to an interesting conversation I had on the phone with ASX. I simply asked can you tell me about the routine investigation policy, without mentioning Slater. Spokeswoman said "we don't perform routine investigations, and everything is 'targeted' if they do investigate." Then I cornered her with the fact that Slater said their investigation is routine with the release on ASX dated 24th of June. She was silent for a while and said "well maybe some cases it can be, but I can't comment on that. "
To be honest, I am really disappointed with most of the people on this forum. Personal attacks to undermine the other person's credibility is something that is really disgusting. Arguing the point with sound logics and hard facts is what we should do here, and not to attack the other person's credibility via defamation.
I hope Slater holds up and survive bankruptcy. But signs are not looking good now. Could be a massive sell off on Monday if this news is confirmed by other sources.
