The Motley Fool Discussion Boards

Previous Page

International Investing / Australia (All-Ordinaries)

URL:  https://boards.fool.com/judith-i-had-a-bit-of-a-look-at-the-latest-14772387.aspx

Subject:  Re: symex - financials Date:  4/15/2001  8:36 PM
Author:  wayjo Number:  2208 of 6186

Judith I had a bit of a look at the latest Announcements to the Exchange and their profit announcement.

As I said in my previous post I know nothing about this company and therefore can't make any assessment about management or their products or the relative economic merits of the business.

But from a "numbers" point of view the company appears about fair value at present.

Market Capn at present = $123m (91m shares x 1.35)
Debt = $8m
Enterprise Value = $131m

EBIT = $15m

therefore selling at about 8.7 times EBIT which is in the fair value range.

Cash Flow from Operations is $18m which is fairly close to EBIT which means they don't have to sink profits back into Stock or Debtors.

There are no institutions of any note on the share register which wouldn't bother me if you're sure it's a quality business.

Profit margins and Return on Assets are very good at present and at the high end of what businesses manufacturing and selling products can expect to achieve.
EBIT Margin on Sales about 20% (I didn't write the sales figure down sorry)
and Return on Assets (EBIT/Total Assets) about 31%


Questions you need to ask of yourself:
- what is the long term fundamentals of this business and its product

- what is the capabilities of management (are they honest and working for shareholders or are they profiting at the expense of shareholders - a look at their renumeration packages will provide a guide)

- can these high profit margins be maintained or will competitors enter the market

- following on from above - what are the barriers to entry and who are their main competitors now?

If you're happy with the answers to these questions then the company appears financially sound and you should hold on for the long term and reassess at next profit announcement. I would suggest a price above $2 in the short term might also be a reassessment point as it may be moving above fair value unless something has occurred to warrant the higher price.

Cheers
Wayne

Copyright 1996-2022 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us