BLT - Blis Technologies

**caesar** · 30-03-2010, 09:19 PM

Definitely a vote of confidence from Edinburgh with its new investment. However I wonder if Edinburgh has been given any extra information that helped it making this decision, or did it just decide to invest based on all the information made available by Blis thus far, which is basically nil since the half year results came out in November last year - an information void of about 5 months. Im finding that Blis doesn't really bother with communication. What does everyone else think of its communications?

**jonu** · 31-03-2010, 11:35 AM

I can't get over the vagaries of the NZ market at the moment. BLT is on the verge of a maiden operating profit (being at times cashflow positive in the last 6 months and their progress since I think that is a given) and yet investors are still too cautious to put their toe in the water.
Serious analysis should be enough to put the chequered history out of the frame. You have to wonder at the ability of our fund managers.

Caeser I think their communication leaves something to be desired but at least they are consistent.

**simla** · 31-03-2010, 11:44 AM

I think perhaps BLT give the impression of communicating less than they actually do, by the use of an economical writing style (which I quite like actually.) For example, yesterday's announcement said "good progress", and that's probably exactly what it meant. The full and half year reports have become very full and informative lately - 5 pages of discussion last time. And there have been announcements each time for Frutarom, for Edinburgh, for Costco, GRAS, M18 - all the big things to date. There's always more we would like to know, naturally.

**winner69** · 31-03-2010, 12:01 PM

Originally Posted by jonu

I can't get over the vagaries of the NZ market at the moment. BLT is on the verge of a maiden operating profit (being at times cashflow positive in the last 6 months and their progress since I think that is a given) and yet investors are still too cautious to put their toe in the water.
Serious analysis should be enough to put the chequered history out of the frame. You have to wonder at the ability of our fund managers.

Caeser I think their communication leaves something to be desired but at least they are consistent.

Do you really think any fund manager is going to worry about a $13 million company?

**Cannibal** · 31-03-2010, 12:07 PM

Yep - vagaries is the word.

BLTPA up 20% today - BLT down 7.6%. Go figure...
Why pay $2.80 for BLTPA - that equates to 11.2 cents a share - when you can get the heads for 10 cents.
Their "Economical writing style" drives me potty. What does "good progress" mean? 100% of target, 200% of target. Both could be described as good.

End of rant - thanks for listening...

**jonu** · 31-03-2010, 12:15 PM

Winner they might be a 13m company at the moment but its what they should be in 1,2,3 years time that should have them excited. I know fundies tend to be conservative, but taking a punt around the fringes on a no brainer should be on their radar.

**simla** · 31-03-2010, 12:32 PM

Okay, it's the end of the financial year, so here's a teaser...

Say, for the purposes of conversation - and this is entirely hypothetical - that BLT announced a profit of half a million to a million dollars. What would that make the shares worth? All the following are very rounded figures for the sake of conversation. Corrections always welcome.

With 138m shares, half a million is around half a cent a share. With a PE of 15, the shares might value at 6 or 7 cents. With a PE of 25 (a growth stock), they might value at 12 or 13 cents.

Or with a profit of around a million dollars, that is getting closer to a cent a share. With a PE of 15, shares are worth maybe 15 cents. With a PE of 25, they might be getting on to 25 cents.

But wait. BLT announced a loss of around $200,000 last half. Is there any point in including that in the result, as the future comes up? Then a half million profit full year would be $700,000 second half. You MIGHT value it at a full year profit of $1.5m, or two profitable halves then, that is 2 times $700,000 - or 3 times the actual result! Now a profit of $1.5m might value out at 17 to 27 cents.

But wait again. BLT is clearly in a growth phase. Might they double their profit in the coming year based on the information received in the report? Might they then possibly run a profit of $3m in 12 months time? (yes, this is all utter speculation.) Then are the shares worth 30 to 60 cents now?

All based on a profit announcement of a half to a million dollars. Using different maths, the shares then might be worth 6 cents, 12 cents, 15 cents, 25 cents, 30 cents or 60 cents!!

Yes, you're saying "the shares are worth what someone will pay." Quite right. But nevertheless, what would a sane investor be willing to pay? After all, you pay your $100 now for bonds/deposits to pay you your $105 in a year's time. What might a sane person willingly pay now for a share that they thought might be worth over 50 cents in a years time based on information they might receive in a few weeks time? (Again, utter speculation.)

The biggest load of hypothetical twaddle you've read in a while? Quite possibly!

But one thing's for sure: if BLT announces a profit, suddenly there will be figures in the "PE" and "Gross Yield" columns of the share listings. What effect will that have on the share price? More practically, the above hypotheticals boil down to: what PE will the market assign BLT? And what would that mean for the share price if BLT announced a profit of less than half a million?

All of this demonstrates how maths makes it pretty hard to judge BLT's worth, even if we knew the next result. But a PE value WILL be maths. Ideas anyone?

Disclosure for those who can't see the obvious: I own BLT shares! All of the above is total speculation, do not rely on it for any purpose! I put it up just for discussion. What are the shares worth? Ideas?