By David Press on
6/2/2011 9:38 PM
Hansen Technologies Ltd's ( HSN-ASX) management team announced significant profit upgrades for the 2011 financial year earlier this week, which has prompted me to update my analysis of the company which should make for some interesting reading.
Hansen this week revealed internal expectations for full year EBITDA of approximately $19.5m on revenues of around $57m, and an EBIT of approximately $17m. Based on an estimated tax rate of around 22% (a little conservative and may come in slightly lower), I'm anticipating a NPAT somewhere in the $13m region, a very impressive 20% increase on last years results.
As I wrote in my last blog on Hansen Technologies, the company's revenues have been hit by the persistently high value of the Australian dollar, mostly...
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By David Press on
5/20/2011 8:12 PM
Having eagerly followed LinkedIn's IPO and first trading day, I can't seem to shake that strange feeling of deja vu. LinkedIn shares traded as high as $122.70, closing at $94.25, a whopping 109% premium to the company's listing price of $45 per share on the NYSE. It's certainly not the first time a company's first trading day has created a frenzy and pushed shares significantly higher...but the thing that worries me are the all too familiar parallels to the late 1990's early 2000's dotcom boom and bust.
According to Bloomberg, at the close, LinkedIn was valued at $8.91 billion dollars, some 24 times 2011 revenue (annualised from first quarter revenue figures). Should common sense prevail, I feel there may very well be some punters walking away from LinkedIn a little lighter...
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By David Press on
3/3/2011 3:19 PM
 Management of Strike Energy ( STX-ASX) this week announced disappointing results from their promising Steindorf-1 well on the Gulf Coast, USA. As I discussed in a recent blog, having sold the majority of their producing assets in the US, Strike's management and share holders were no doubt excited and hopeful that reserves and cash flow would quickly be replaced by the latest well tested by the joint venture. Unfortunately it is not to be and the disappointment was evident in a sharp drop in the share price back to the high teens. In an attempt to put a positive spin on the disappointing results, management...
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By David Press on
12/7/2010 2:35 AM
Having published a number of blogs of late mentioning Return on Equity (ROE) and intrinsic valuations ( HSN and DDT, I thought it a good idea to briefly discuss why we are using ROE as a key measurement of performance.
It revolves around the quite simple notion that a rational investor should desire an adequate return on the money they have invested, to make up for the additional risk they take by investing in a business. The ROE figure reveals the return management have achieved on shareholder funds/capital/equity, and therefore gives a return on what you are...
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By David Press on
11/30/2010 11:28 PM
Management of companies generating strong cash flows, with a strong balance sheet are often left with the difficult task of maintaining growth without squandering shareholder equity in the way of overpriced acquisitions. BHP comes to mind when I think of such companies (one need only look at their attempted acquisitions of Rio Tinto and Potash Corp. of Saskatchewan Inc). Shareholders often desire the excess cash be distributed rather then see management pay excess sums for acquisitions, resulting in lower returns on their equity, and it often shows in share price weakness whenever such large scale announcements are made (NAB and BHP being recent examples). Hansen Technologies Limited appear to be a company who deal with this conundrum...
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By David Press on
11/4/2010 4:34 AM
DataDot Technology Limited (DDT-ASX) may be a company many have not heard of, however I'd suggest anyone experiencing high levels of theft in their neighbourhood and or anyone with a taste for high ROE growth stories, should keep an eye on this small cap Australian company.
Thou shall not steal has been a commandment ignored by far too many for far too long, but it is from this that DataDot have developed a suite of property protection, identification and authentication products, most of which are covered by intellectual property laws. Their flagship product (which has been on the market for a number of years) is their DataDot technology. For those who haven't heard of the product, it is a microdot technology that is applied to items before, at or after purchase which provides the product with it own identity, somewhat similar to engraving the product. The obvious...
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By David Press on
9/11/2010 12:09 PM
Service Stream, one of Australia's leading communications and utilities industry service providers, has left many investors scratching their heads wondering if and when management can turn this company around. "One off" losses and legal claims from recent projects has resulted in SSM posting a full year loss of over $2m for FY2010, after posting profits exceeding $10m in previous years. It could be argued that you can look past the losses due to “one off's”, but the question remains, how many “one off's” do you allow before they become continuous wealth destroying activities?
Let's be positive and assume management do turn it around and the company runs smoothly throughout coming years. Service Stream operates a low margin, low ROE business which on it's own makes me apprehensive to invest in the company. The company does however have a large contractor...
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By David Press on
9/5/2010 2:26 PM
Having had the pleasure of watching a fair few programs on the Sky network's business channel featuring Roger Montgomery, when I heard of his book I very quickly visited his website and made what I believe is a purchase many may find invaluable. His published book Value Able...
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By David Press on
6/15/2010 10:10 PM
With the end of financial year upon us, many will be looking to make tax loss effective sales of their under performing holdings. This is often an opportunity for the value investor to find some real bargains. Clarius Group (CND-ASX) may very well be one such play to consider given the stock has dropped around 25% from its early 2010 prices.
Clarius Group, like other cyclical stocks, were always going to get a beating when the market crashed in late 2008 and early 2009. They have again been hurt by the uncertainty Europe's debt issues have created and are now offering great value to the investor who believes in the overall world economic recovery.
On a financial basis they continue to look cheap. Based on average earnings from the last five years, their Price Earnings Ratio is an average of 8.38 (this takes into account recent raisings and complete dilution). I prefer the use of at least a 5 year average for earnings based indicators in order to smooth...
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By David Press on
3/30/2010 12:39 PM
Benjamin Graham's The Intelligent Investor is as Warren Buffet puts it "by far the best book on investment ever written". The book, often referred to as an investment bible, explains the strategy of buying stocks priced below fair or intrinsic value and holding for the long term. It follows from his previous book titled Security Analysis, written with fellow author David Dodd. The basic principle behind value investing as explained by Graham, is that the market is not efficient and that it suffers wild fluctations which result in companies being grossly overvalued and incredibly undervalued depending on market moods. These "moods" are often referred to as "Mr Market" throughout the book.
In more recent editions (there have been several editions since it's first in 1949), there have been additional prefaces and footnotes, notably from Warren Buffett and Jason...
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