"SMP SP up to $1.10 today after being around $1 for a while. I...

"SMP SP up to $1.10 today after being around $1 for a while. I expect the next trading update will be good."

A good trading update will be nothing new for SMP.

The past several years have provided numerous very good trading updates in its all-important Australian Acquiring Revenue business, with growth only skipping beats slightly during severe Covid disruptions, but more than making up the lost ground in the subsequent periods:



As can be seen in the graph, four years ago, the Australian business represented less than 15% of total group Revenue. Today, it accounts for 80%, now dwarfing the static NZ Revenues.

By the law of numbers, over time the Whole takes on the growth rate of the Fastest-Growing Part, and as can be seen in the chart below, as the fast-growing Australian Revenue has become proportionately larger, Total Group Revenue increasingly taken on that superior growth profile:




The funny thing is that the market for a long time totally ignored this attractive growth dynamic: for the last 2 years (until just very recently, that is) the share price did very little: it was 58c at the end of of 2020 and just 64c at the end of September 2022, almost two years later.

Then magically, where the market ignored the spectacular top-line growth for a long period of time, it one day - for no obvious reason - decided to recognise it, and the stock almost doubled in the space of a little more than months.

Same company, same assets, same business model, same people, same everything... except the market has decided it must now be worth twice as much as it was just a short time ago.

It's yet another example of how, while stock prices ultimately reflect company valuations over the medium- to long term, over the short term there is simply no accounting for the market's behaviour.

As remonstrated in this case, the market is often a highly irrational creature.

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