what will rdf price be in the us?

The only real guide we have is the price of Nestor, the largest competitor in the digital red-light/speed camera market in the US.

By the end of December, Nestor will have 115-120 approaches installed; Redflex will have 400-410. Redflex is clearly profitable, with revenues and profits rising sharply; Nestor has yet to make its first dollar. Redflex won 25 new cities in the past year; Nestor won four, with the largest being as sub-contractor to another company.

With this simple picture, it would be hard to assess the value of Redflex at less than three times that of Nestor. The current market cap of Nestor is $US136m, or $A174m. So an equivalent market valuation for RDF would be $A522m, or about $6.20 per share.

We can discount that value a long way, to allow for the natural uncertainty a US investor will have about a foreign company, but still leave room for considerable upward movement when the ADRs, allowing US trading, are issued in late February. If we add in the effect of a probable strong earnings announcement in February, then the current price surge looks fully justified.