On the Fundamentals side of things, this is a stock which has only been around for a very short period of time and therefore it is difficult to get a good handle on the financials. But there are a few things that stand out:
- the stock is controlled by the CEO to the tune of over 46%
- the financials (to date) are nothing to get too excited about e.g. the Profit and Loss is still running at a Loss and the Balance Sheet is carrying a lot of Debt.
- why the dividend? My guess is that the company had Franking Credits and in order (for the CEO) to make the best use of them (for himself, I suppose) was to declare a Fully Franked Dividend;
- where did the money to pay for the dividend come from? From borrowings; nothing new but not desirable by the same token.
The other issue is the price behavior prior to the announcement. I have noticed that what happened with this stock has also been happening with the majority of stocks reporting - the price goes up till a couple of days before the Report is due and Bingo - Down she goes !! Why? My guess is that the overall market is so lacking in confidence that the 'major players' have become traders and are taking profits.
Would I continue to hold the stock if I was in it? I'm not in it but, on the Fundamentals side of things, I would be inclined to give it a bit more time, perhaps another year to see how the Profit and Loss shapes up and if they actually increase the Revenue and make a Profit; I would also monitor the Debt situation.
On the TA side it did have a healthy retracement but it needs to hold that 'line in the sand'.
