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Originally Posted by winner69 5 April 2010
I think you need to take that reported PE of 8.63 with a grain of salt as prob based on LGL reported financials which have no semblence to the merged entity
A PE of 8.63 implies NPAT of more than $4 million which seems a bit far fetched at this stage .... even with the synergies of $2m which might come through
Will be interesting to see how all this pans out
I only just got around to looking through the FY result and agm speech. At $3.5m NPAT, they were probably a little over $4m NPAT normalised for acquisition timing. Synergies might have been better than suggested, since the agm speech says second half for both companies showed an improvement of $1.36m over prior. Although tax wasn't quite normal and there is a bit of interest income from the extra cash sitting there.
I thought it looked interesting, though there is a fair bit of goodwill in the assets buried in the equity accounted value of group investments. Means ROIC is only okay-ish. Seems to me this is a difficult business to expand organically with expansion probably driven by acquisition and somewhat capped by the size of NZ (still a bit of room to go though), so acquisition price becomes critical. Overall looked to be fairly well run and I'd still see as reasonable value at current price (37cps).
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