overkill, page-10

re: for sb2000 To save you some reading here's a quick snapshot of Cardno Ltd. Work out from there if you should read the prospectus.

Positives:
1) Long established company with good reputation in its industry (providing a range of engineering services)
2) Good profit history, and good cash flow history
3) Valuation undemanding (PE of 7.2 based on 2004 projections, or PE around 10 based on historical 2003 numbers)
4) Forcast dividend yield of 9.2% 2004, and 11% 2005
5) Directors / management highly experienced in the industry
6) Money being raised is not a sell-down of current owners, which are all directors and staff, but for new equity to fund expansion (actually, I see the listing as a way to create liquidity for the current shareholders and allow more effective staff incentives as the financials show they do not need the cash at all)

The main risks I see, apart from the standard industry risks, are:
1) size: float raising around $4.5 million. Market cap of around $35 million. A microcap (albeit one with a profitable and dividend paying history)
2) Hence liquidity could be very thin, and hard to move in / out in volume easily
3) small movements in some key numbers (expenses, sales ... ) have huge proportional impact (+ or -) on profitablity

As I said, I've subscribed.

Cheers ... MJS