Morgan's Nan, page-5

I bought NAN in the 40's about 5 years ago. My biggest and most fruitful play ever. Told my wife at the time that this investment will pay boys school fees and it has. Sold most along the way as my holding became too large. Sold my remaining holding the other day because at a 100pe. Very hard to sell as company share price has gone so well. But can't get emotional, latest result was disappointing... modest growth result and as such I think return from here will b modest particarly if they try to develop new products which require capital. I am amazed after 5 years of being around cash flow nuetral, NANs profit is only 3 mil per last half.

Back of the envelop...current 16%'market, 30m rev 80% margin. Say 80% market (16% growth per year in 4 yrs,) = 150 rev 120 gross less expenses say 30m without considering new product development costs say 90m profit ... Say At 20pe with saturated market share, Share price will b around double all things going well. However there is a big risk sales growth will diminish with market saturation. Plus substantial increase in potential R&D for new product trials. Really like the consumables side of the business (the trophies units are relatively low margin like brother copiers) Is there a risk of a generic consumable made in China? Lot of risk at 100 PE even with 65m in cash. All IMO. Best of luck