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17-10-2012, 09:19 AM
#791
Money Manager
Originally Posted by The BOWMAN
mknz, I am just wondering how Rakon could drive their profit higher. The margin in this industry is so thin that there is barely much money to be made. They could continue expanding on revenues but won't necessary increase their profits, which seems to be what is happening for the last several years. Can you elaborate what is supporting your rosy prediction?
SWD's are only one part of Rakons globally diversified product portfolio. 25% of ebitda comes from high reliability devices which have very long stable revenue cycles. Remember that Rakon makes the quality infrastructure that is required to support the mass human migration to swd's and will be reaping the high margins on 4g infrastructure for the next five years. Nevertheless, Chengdu is profitable and this will be it's first full year of operation since the facility opened. Last year's particularly bad results came partly due to the cost of building a huge, cost effective plant that could not assist rakon's bottom line. This is no longer the case and Chengdu has been fully operational for the half year ending.
In the end, Rakon is seriously oversold and past the bottom of it's market cycle. This year will hit squarely in the middle of guidance and next year 4g lte will solidly assist revenues.
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17-10-2012, 09:44 AM
#792
Money Manager
Originally Posted by ratkin
Basically it is impossible for the average shareholder to price this one up. Its recent share price stability probably has more t do with rising tides and boats.
There are better, less opaque opportunities elsewhere
I believe you are seriously underestimating the diversity of intelligence of shareholders, a well as the technical side of every play. For now I agree the middle of the bell curve aren't seeing this, but next year they will jump on after Rakon has already appreciated to 60-90cps. Frankly, Rakon is currently priced as if it its going out of business which it its clearly not. Nobody is calling this a xro, peb, google, or appl, but with net tradable assets worth twice the current market cap its not that difficult to see value here if you look.
Another important point is that investing is a zero sum game. The "average investor" breaks even, while the top of the curve makes as much as the bottom of the curve loses.
Last edited by mknz; 17-10-2012 at 09:51 AM.
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17-10-2012, 09:49 AM
#793
Originally Posted by mknz
SWD's are only one part of Rakons globally diversified product portfolio. 25% of ebitda comes from high reliability devices which have very long stable revenue cycles. Remember that Rakon makes the quality infrastructure that is required to support the mass human migration to swd's and will be reaping the high margins on 4g infrastructure for the next five years. Nevertheless, Chengdu is profitable and this will be it's first full year of operation since the facility opened. Last year's particularly bad results came partly due to the cost of building a huge, cost effective plant that could not assist rakon's bottom line. This is no longer the case and Chengdu has been fully operational for the half year ending.
In the end, Rakon is seriously oversold and past the bottom of it's market cycle. This year will hit squarely in the middle of guidance and next year 4g lte will solidly assist revenues.
I wish I can share some of your enthusiasm.
Rakon unfortunately has been promising a lot over the years and what comes across is that they cannot deliver because circumstances keep changing - GFC, NZ$, telecommunications industry slowdown, competition, price pressure because of over-capacity etc. Always someone's else fault and always there is an excuse.
Boil it all down is that Rakon is in a commodity business and like TVs and DVD players, prices keep going down each year.
Anyway, good luck and hope Rakon rewards your loyalty in the years ahead.
May 2011 : "Commenting on the year ahead Mr Robinson said that he expected Rakon’s overall business to continue growing during FY12."
Nov 2011 : “Our projected EBITDA for the full year remains in the NZ$14 to NZ$18 million range."
May 2012 : "Our 2012 year EBITDA of NZ$13.1 million was below our target and expectation we had when I addressed this meeting 12 months ago.
The most significant factor causing this was a slowdown in spending in the Telecommunications sector."
But there's hope :
Sept 2012 : "So while our share price and profit performance is not where we want it to be Rakon is very well placed for the future."
But then, you read this :
Sept 2011 : "We are here for the long term not the short and although the share price currently does not reflect the value potential to those of us who are owners and work for the company we remain very confident that it will." Sp then was 67 cents - it's now 46 cents.
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17-10-2012, 11:16 AM
#794
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17-10-2012, 11:20 AM
#795
Money Manager
So unloved. Management has made great long term decisions at the expense of short term and I'm betting these decisions are starting to pay off. The knife has stopped falling. We'll just have to agree to disagree on this one balance.
Last edited by mknz; 17-10-2012 at 11:21 AM.
Reason: typo
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17-10-2012, 11:44 AM
#796
Originally Posted by mknz
So unloved. Management has made great long term decisions at the expense of short term and I'm betting these decisions are starting to pay off. The knife has stopped falling. We'll just have to agree to disagree on this one balance.
Its down another 2.2% already today, and looking at the market depth it may soon be 4.4%
Why not just hitch a ride on something going up , there may well be a time to invest in Rakon , but now isnt looking like that time
If Rakon went on Dragons den , they would be told "you dont have a buisness. Im out!
Last edited by ratkin; 17-10-2012 at 11:49 AM.
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17-10-2012, 12:19 PM
#797
Money Manager
Originally Posted by ratkin
Its down another 2.2% already today, and looking at the market depth it may soon be 4.4%
Why not just htch a ride on something going up , there may well be a time to invest in Rakon , but now isnt looking like that time
If Rakon went on Dragons den , they would be told "you dont have a buisness. Im out!
I think I spooked some shareholders and caused that dip. Anyway I'll be here at least until after earnings on Nov 15th or so where I expect to take profits at 64 or thereabouts. I don't care about short term price fluctuation, I've done a huge amount of homework on this one.
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17-10-2012, 12:26 PM
#798
mknz, while I agree with your sentiment on Rakon, it is very high risk/ reward, they have been on my watch list for the past year, but I am happy to wait for some real positive news from the company before becoming a shareholder.
Originally Posted by mknz
Another important point is that investing is a zero sum game. The "average investor" breaks even, while the top of the curve makes as much as the bottom of the curve loses.
Investing in shares however is not a zero sum game.
All global share markets over the long run have returns in excess of inflation. If share markets were a zero sum game, long term averages would be between 0% and inflation.
~ * ~ De Peones a Reinas ~ * ~
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17-10-2012, 12:33 PM
#799
Originally Posted by mknz
I think I spooked some shareholders and caused that dip. Anyway I'll be here at least until after earnings on Nov 15th or so where I expect to take profits at 64 or thereabouts. I don't care about short term price fluctuation, I've done a huge amount of homework on this one.
Get rid of Bryan Mogridge as a director and the sp will go back up to 50 cents immediately.
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17-10-2012, 01:37 PM
#800
Money Manager
Originally Posted by Silverlight
Investing in shares however is not a zero sum game.
All global share markets over the long run have returns in excess of inflation. If share markets were a zero sum game, long term averages would be between 0% and inflation.
Sorry, you're mostly right, investing isn't zero sum except perhaps theoretically on a long enough timeline. I misspoke myself. I meant to say trading is a zero sum game.
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