XRF remains at #4 on my 'top 20' list. It's a solid micro-cap...

XRF remains at #4 on my 'top 20' list. It's a solid micro-cap with poor liquidity being a handicap. Mkt Cap about 33m of which about 7.3m is cash. I'm expecting FY12 revenue of 26.2m, NPAT of 3.5m and EPS of 2.7c. Hence at SP 25.5c (my recommended Buy Price) gives a PE of 9.44. That's considerably higher than i would pay for most firms but XRF has some things in it's favour.
1) Makes a flux that is essential to test IO and base metal purity. High AUD makes imports a threat, but XRF has good service and mkt penetration. But IO and esp base metals have gone to hell-in-a-handbasket... so how can exposure be an advantage? thing is margins are so tight for many mines they can't afford to crush/process any ore that is below par. So my guess is that testing ore has actually increases as it save s money down the line.
2)One item the high AUD has def assisted is the cost of platinum which is used in the lab tools made and sold by XRF. Hence, expect a margin increase from this sector.
3) New technology has resulted in new and better products from XRF. I hope the sales have been decent.... but this remains the biggest unknown re XRF.
Their results detail sales/margins etc from ech sector of company and I'm hoping they will exceed current market expectations. XRF only pay one div each year. I'm expecting a big jump to 1.75c at 100% f.franked. This equates to 6.8% net and 9.7% gross. So buy before results/ex-div date to benefit. Here's hoping. MikeM.

PS. The BEST thing about XRF is it hasn't gone on a mad trail of acquisitions. Bought well 12 months ago but FORTUNATELY kept it's powder dry and coffers full since then. Hence, a larger div is easily affordable. Afterall, it's still only 65% of earnings.... and XRF (fortunately) has very little capex.