showing its quality, page-13

Not too many turnarounds have an operating margin of 32% in the first period like TOX does - it normally takes a number of periods of turnaround to get to high margins for their sector.

Just one comparison - EMI.

EMI just had its 6th consecutive period of turnaround and in summary the details for that period are (other 5 listed below if interested)...

2006/1 (6th period of turnaround - half year numbers)
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eps = 0.64 cps - up 59% over pcp
(Profit before tax = $1,621,000)
Revenues = $13,462,000 up 54% over pcp
Operating Margin Pre Tax = 12.0% up 4% over pcp
Return On Assets = 19.9% up 20% over pcp

Here are the TOX 2006/1 1st period of turnaround numbers

2006/1 (1st period of turnaround - half year numbers)
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eps = 0.40 cps - up 595% over pcp
(Profit before tax = $1,596,000)
Revenues = $5,002,000 up 123% over pcp
Operating Margin Pre Tax = 31.7% up 270% over pcp
Return On Assets = 25.5% up 350% over pcp

and here is an estimate for TOX 2nd period of turnaround...

2006/2 (2nd period of turnaround - full year numbers)
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** Note ** some of these are estimates

eps = 0.92 cps - up 1414% over pcp
(Profit before tax = $4,800,000)
Revenues (estimated) = $11,200,000 up 67% over pcp
Operating Margin Pre Tax (estimated) = 42% up 1352% over pcp (prior period small negative margin)
Return On Assets (estimated) = 30% up 1250% over pcp (prior period small negative margin)


Compare the TOX numbers with EMI numbers and the pe ratio ranges of EMI throughout its turnaround that was more modest than TOX and the market caps today (EMI has about 3 times the market cap of TOX).

Market sentiment is a funny thing - maybe EMI is overpriced (even given its recent upgrade with an acquisition) and TOX undervalued?

Interesting to see that a stock can retrace like EMI did last year from 35 to 18 cents while nothing changes - and then goes much higher. The instos and tax loss selling can be cruel at times.


Here are some of the EMI numbers as the turnaround progressed and min/max price and pe ranges after these numbers until the next released...

2003/2 (1st period of turnaround - full year numbers)
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eps = 0.07 cents up 115% over pcp (loss)
(Profit before tax = $126,000)
Revenues = $8,400,000 down 5% over pcp
Operating Margin Pre Tax = 1.5% up 116% over pcp
Return On Assets = 1.2% up 115% over pcp

Min price / Min pe in next 6 month period: 6.6 cents / pe of 94
Max price / Max pe in next 6 month period: 16 cents /pe of 228


2004/1 (2nd period of turnaround - half year numbers)
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eps = 0.28 cps up 522% over pcp (loss)
(Profit before tax = $504,000)
Revenues = $6,387,000 up 50% over pcp
Operating Margin Pre Tax = 7.9% up 383% over pcp
Return On Assets = 9.2% up 492% over pcp

Min price / Min pe in next 6 month period: 10 cents / pe of 28
Max price / Max pe in next 6 month period: 15.5 cents /pe of 44


2004/2 (3rd period of turnaround - full year numbers)
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eps = 0.57 cps up 700% over pcp
(Profit before tax = $1,037,000)
Revenues = $13,085,000 up 56% over pcp
Operating Margin Pre Tax = 7.9% up 428% over pcp
Return On Assets = 8.3% up 571% over pcp

Min price / Min pe in next 6 month period: 14 cents / pe of 24
Max price / Max pe in next 6 month period: 35.5 cents /pe of 62


2005/1 (4th period of turnaround - half year numbers)
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eps = 0.40 cps - up 41% over pcp
(Profit before tax = $1,015,000)
Revenues = $8,749,000 up 37% over pcp
Operating Margin Pre Tax = 11.6% up 47% over pcp
Return On Assets = 16.6% up 81% over pcp

Min price / Min pe in next 6 month period: 18 cents / pe of 26
Max price / Max pe in next 6 month period: 32 cents /pe of 46


2005/2 (5th period of turnaround - full year numbers)
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eps = 1.34 cps up 136% over pcp
(Profit before tax = $2,027,000)
Revenues = $17,036,000 up 30% over pcp
Operating Margin Pre Tax = 11.9% up 50% over pcp
Return On Assets = 13.4% up 62% over pcp

Min price / Min pe in next 6 month period: 32 cents / pe of 24
Max price / Max pe in next 6 month period: 68 cents /pe of 46