Does anyone understand how the available tax losses continually...

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lteh

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21/05/23

12:50

Post #: 67883810
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Originally posted by PortfolioPlus: ↑

HK1, I am not aligning with West, nor am I suggesting SHJ are doing anything illegal or under handed. I am reliant upon the auditors to assess the commercial legitimacy of the quantum of WIP and client expenses. But I am dubious.
They (West) raised the WIP issue and it’s an issue I struggle with. Firstly, SHJ got busted on this some years ago (around 2015 from memory) and the impact on the share price (read the markets lack of confidence) was breathtakingly dramatic. Check the charts at the time. Since then the market has labeled SHJ as a leper. I do think management should address this issue. It’s simply not good enough to say ‘we don’t care about the market, we will just get on and run the legal business’. One has to do both.
I am fortunate not to have been a IPO subscriber, poor beggars must be surviving by eating the dates off the calendar, such is their investment destruction.
secondly, as Buffett would say and the DCF valuation model postulates, the value of a business is the sum total of its future free cash flows discounted to its present day value. In SHJ’s case, what free cash flows, the reported net profits all get caught up in the vortex of WIP. & client expenses like an ever increasing and rising tornado. Remember the apple that hit Newton on the head? Gravity would surely dictate that at some stage this balance of a paper asset will hit the SHJ bank account.
Equally, growth cannot continue indefinitely in a small market (Australia). One cannot exceed 100% so WIP must recoil at some stage…PROVIDING…SHJ doesn’t find another market (UK or USA) to expand. And that’s another concern I have. SHJ shareholders have had a rough ride. The dividends are well less than other professional companies in which I invest and they are unfranked.
Yep, I get it, SHJ is a lumpy business and maybe we are getting close to a reasonable earn in Ethicon. Perhaps it’s time to reward shareholders by paying a special dividend of significance. Plus putting a real effort into educating the marketplace about the qualities of SHJ because as structured with such a heavy overhang of Morrison & Roche (and good on them, they probably deserve it) the trade volume is lamentably low and the interest of institutions is zero. Till one or both of these situations occurs, SHJ has to be one of the biggest value traps on the ASX. PITY.

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Does anyone understand how the available tax losses continually increased from $17.7m in 2017 to $49.4m in 2020 when the NPAT was positive every year? The only reason I can think of is that impairments are counted towards available tax losses but not net profit?

Last edited by lteh: 21/05/23

SHJ Price at posting: 68.5¢ Sentiment: Hold Disclosure: Held
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Last 69.5¢		Change 0.000(0.00%)		Mkt cap ! $120.4M

Open	High	Low	Value	Volume
0.0¢	0.0¢	0.0¢	$0	0

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No.	Vol.	Price($)
1	5580	69.5¢

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Price($)	Vol.	No.
72.0¢	4750	1

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No.	Vol.	Price($)
1	5580	0.695
1	1515	0.660
2	4564	0.650
1	9347	0.645
2	39300	0.640

Price($)	Vol.	No.
0.720	4750	1
0.735	1332	1
0.740	2527	2
0.750	4088	2
0.755	3979	1

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Does anyone understand how the available tax losses continually...

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