woof woof, page-21

I've been following BNB for a while now and hve done some historical research on BNB to put the current share price in perspective:

Here's the story since listing:

Listed in October 2004. $5 float price & due to demand listed on its first day at $8/share. Hit $7.60 in weeks that followed but quickly ran to $10+
In the prospectus the forecast profit was $136m. In May 05 it upgraded guidance to $180m at that time its price was $10.58 - coincidentally almost exactly the share price that the stock opened today. Eventually recorded a profit of $250m for 05.

It's recent profit performance has been:

2006: $408m
2007: $643m
2008: (broker forecast) $748m
2009: (broker forecast) $825m

The recent price performance of the shares suggests the market simply doesn't believe that BNB will hit its guidance. At $10.58 back in 2005 it was on an average PE ratio of 20x earnings. This is probably an appropriate PE for a stock which you expect to grow (or has defensive characterisitics). For example:

CSL Ltd - PE of 30x
LEI - on 23x
WOR - on 28x
WOW - PE of 20x

Obviously if you expect earnings to grow quickly in the future, you are happy to pay a higher price now. On BNB's current guidance and share price, its current PE is 5x.

Not even shitty stocks have PE's that low. Look at FGL today, CEO resigns, downgrades and stock is up 3% and current PE is 15x...

The average PE of all stocks on the market now is around 14x. If you said BNB was an 'average' stock it should be worth $30/share...

That suggests no confidence that they can achieve it. Looking at it this way though, even if they only do half as well as guidance they are only on 10x.

Sorry for the in-depth story here but there is a lot of 'noise' around this company - lots of rumours and innuendo etc. I think its best to get back to plain facts. IF they can meet their guidance, they are one of the cheapest stocks around. If they can't there will be short term pain. A drop below $7.50/share implies a breach of a mkt cap covenant and the banks have an option to review their loans to BNB. This would be bad for sentiment and could cause further falls in price.

I think given that staff own 40% of stock they need to do something quickly to put a base under the stock price - how about a $500m/15% buyback - assuming BNB is worth $30/share this would meet even BNB's return on investment hurdles??

The low share price has got to be doing as much or more harm than the credit crunch, needs to be fixed..