Ready to Pop, page-44

I think it was a solid result overall and I would imagine that over time we should see the sp rise to reflect the increased confidence in the stock and the sector, and over time the class actions should, on average, continue to be quite lucrative. A lot of the doubts should now be put aside regarding the financials of the company and in my opinion many of these doubts were not very well founded to begin with. Without the $5m write-off you get an EPS of around 15c. Historically similar companies in this sector locally and overseas have traded 12-15x, and this was the case for shine for a period.

15x15= $2.25 ( The laughable upper estimate)

Current EPS 11.6*Conservative long term multiple of say 10 = $1.16 ( Lower estimate)

Even if we get the lower estimate wrong by 30% that still gives a sp well higher of today's price. For me, once you look at the cash-flow (particularly) and the rest of the balance sheet this is clear value any way you look at it.

With the company steadily diversifying into emerging practices and geographically, a fully franked dividend and even with modest growth I can't justify that any risks aren't already built into the sp I wouldn't rule out growth in the future when the sector turns, as it's clear from the data in the IBIS report mentioned in the presentation that the sector is still highly fragmented and there should be opportunities to capitalize on this, even if they are as simple as economies of scale related to advertising costs. ( Compare the costs for other Sydney companies such as Malouf, Law Partners plus about a hundred others to get a customer in the door compared to Shine's costs per customer.

At the moment the sp still reflects sentiment to do with SGH, legacy WIP provisioning fears and a lack of understanding/effort of the accounts. Looking forward for the re-rate as holder from 2015.