Have a Crack. I am unlikely to make good decisions in a week...

Have a Crack.

I am unlikely to make good decisions in a week where another investment just rocketed after 4 yrs of decline /dilution/ consolidation and is being tipped fro stardom .......and Scotland beat the best team in the 6 nations rugby. ( Am not used to it - but will adjust) .

I actually think there are different ways to recapitalise and that when it can demonstrate its level of expected ongoing earnings and tell the financial engineers the likely outcome of NIHL, that the financial engineers will be imaginative and will come up with a financial engineering solution. Once done the boil of overgearing will be lanced and SGH can get on with running a business no longer under the sword of Damocles.

You know even disaster presents some with opportunity , and there can be no doubt that a company with normal gearing and a modicum of growth would be valued between 7 and 20 times profits .
There are several elements which can ameliorate the gearing ratio if they come good and the simplest one of all is a 10-15% shrink of activity and WIP to generate cash.

Anywhichway I have a notion the SP is currently underpriced . I am certainly content to wait out the next 18 months to give management time to do all they can to fix the gearing. They are presumably pulling the right levers.

Even good figs this month and a bit of guidance and hope on NIHL could be a catalyst for a return of confidence.

Mel