Thanks for the post Mad. A bit of a devil's advocate reply as I...

Thanks for the post Mad. A bit of a devil's advocate reply as I am trying to stress test my thesis.

Madam, you say with regard to THO:
"My understanding of the business that SKE acquired was that it was a maintenance outsourcing business, whose fortunes largely depended on the variable whims of whether its major customers wanted to do things themselves or to get outsiders to help them do it."
Is this not a problem which tests SKE similarly? Although looking at track records of the two, one is led to believe that SKE has an embedded advantage which ensures clients keep using their services, a reputation advantage for quality perhaps.

"SKE has never recorded negative Free Cash Flow in any financial year (even the GFC saw FCF breakeven)."
I have FCF for 2008 as -$13.1m as opposed to breakeven -  not sure where I could have differed from you? I have excluded acquisitions from investing CF.

Finally, I am at-odds with your FY16 EV/EBIT multiple.
Based on the $70m EBIT broker forecast, $1.25 share price, $180m NIBD, 236m shares, gives EV at $475m.
Therefore I am getting closer to 6.8x for EV/EBIT FY16 rather than the 6.1x you are getting.
I am not arguing the cheapness of the company, on that I certainly agree.

The final hurdle that I am struggling to overcome, is committing capital to a company with leaders that have proven to continually make acquisition blunders. The underlying ROIC of SKE proves that it is more than just an average business, but the management actions appear to be masking the ability of those returns to make it through to wealth creation for LONG TERM holders. Perhaps that for this reason, this business will be better suited to an active approach with the finger never far from the trigger should further acquisitions unfold.