Short Term Trading, page-7

Here's a review for my WKT trade, based on my FA Analysis here:

The current Market Cap is 13.8M @ 1.0 c. This represents about a $2M premium on Net Assets. At the beginning of September, this was much lower. The Market Cap them was 13.8M *0.3c = 4.1M. That's a 64.6% discount on Net Assets.

How can I liken the situation? It's like getting a quality shirt at 65% discount. The company was financially sound, which is head above most companies in this short-term bear market. Why wasn't it noticed? I'm not certain, but I'll do my best to replay this stock in the last year:

30th June 2014: Financial Report states the following -
* 12.3M Net Assets
* 0.4M Cash
* Net Expenses: 1.79M
* Market Cap: 5.5M @ 0.4c

From this, we can deduce that they needed a CR event remain in business. The business is still at a 55% discount

The following events occured for FY15:
* 119K raised for Lindi Jumbo
* 4th June 2015: Non-entitlement offer of 1.37M for Lindi Jumbo, eventually gets completed in September 21st 2015.



So, from a investors perspective, the company sits at the following at 30th June 2015
* 12.3M Net Assets
* 0.4M Cash + 0.12M (Lindi Jumbo)
* Net Expenses: 1.79M
* Market Cap: 5.5M @ 0.4c

Still a heavily discounted stock. However, investors will get a surprise as we will see later.

These are the events that occur after 30th June 2015

* 21st September 2015: Non-entitlement offer CR event closed.

This puts WKT in this position as at 21st September 2015 from the perspective of the shareholders:
* 12.3M Net Assets + 0.12M (Lindi Jumbo) + 1.37M (CR event)
* 0.76M Cash + 0.12M (Lindi Jumbo) + 1.37M (CR event)
* Net Expenses: 1.79M
* Market Cap: 7.02M @ 0.6c

The company is now solvent! Share price jumps to 0.6c, a 50% increase. Still represents a 49% discount.

The biggest surprise though is their FY15 Financial report. Remember how we were taking about these figures from a shareholder's perspective? These figures below is what the business is really at as at 30th June 2015:

* Net Assets: 11.7M + 0.12M (Lindi Jumbo)
* Cash: 0.76M + 0.12M (Lindi Jumbo)
* Net expenses: 0.55M (down from 1.79M)
* Market Cap: 5.5M @ 0.4c

So, in summary, as at 20th June 2015, the financials were very healthy (Net Cash/Net Expenses ratio of 4:1). On top of this, a share holder is buying this stock at a 53.4% discount of net assets. This deserves repeating: a shareholder is buying a financially sound company, with good prospects, at 53.4% discount of book value.

It's not surprising that, at around this time, company directors were adding to their position size in the company.

So, with all things considered, here's their financial position as at 21st September 2015:
* Net Assets: 11.7M + 0.12M (Lindi Jumbo) + 1.37M (CR event)
* Cash: 0.76M + 0.12M (Lindi Jumbo) + 0.12M (Lindi Jumbo) + 1.37M (CR event)
* Net expenses: 0.55M (down from 1.79M)
* Market Cap: 5.5M @ 0.4c

Good buy? I think so. Share prices jumps from 0.6c to 1.1c in a week.

Where is the company headed? I'm not sure - I'm not a speculator. $2M premium is nothing compared to the likes of PLS ($175M premium, lol). Would it still be a good buy? Possibly. If and when this company gets things into production, I think this company will be looking quite a good buy, just as it did in 30th June 2015.

Here are the dates highlighted in the charts. Hope you enjoyed this post as much as I did.