Mega Rich/Sunbridge, actually are not short of any cash as the business has been growing steadily and generating solid cash flow.
Current debt ($4.5m) can be fully repaid within September quarter if SBB wants. Last quarter they generated nearly $6m net cash from the operating activities.
The beauty is the low cost in China, labour cost is almost 10-20% of Australia's. Rental and other operating expenses are also much cheaper in China.
To to own additional 35 stores, SBB only needs to spend $3m. Very cheap!
SBB will generate over $24m cash next 12 months without considering growth,
then cash will be approx. $51m by 30 June 2015. ($30.5m current cash - $3m acquisition of 35 stores + $6m per quarter x 4)
If dividend of 1c being declared in Sep 2014, then cash will be $47m.
Dividend yield is 8% based on 13c share price.
As projected SBB will have $47m after dividend paid. The company can afford to spend as aggressively as $30m to acquire 350 stores, bringing up 410 own stores by 30 June 2014. Then SBB distribution network will be double in 12 months. Net profit will be huge...
SBB Price at posting:
13.0¢ Sentiment: Buy Disclosure: Held
