SCT - Scott Tech

[Snoopy]

Whether $1.80 or so represents a bargain could depend on the depth of one's vision. For those looking short term, say as far out as the FY 2016 announcement, there might be no compelling bargain. Those looking further ahead, mindful of the difficulty of easily picking up shares in an illiquid company if/once profitability bounces, might be paying very sensible prices.

I agree with the above comment by U.S., which is why I am not selling!

At the road show, Chairman Stuart Mclauchlan said that the most profitable part of what SCT currently does is the repeat installations of meat industry robotics. But oddly, Robotic Technologies Limited and NS Innovations Pty limited, the meat industry robotics joint ventures both report their contribution to Scott Technology's profit as 'Nil' in AR2015 (page 38). This does not line up against what the Chairman said in the road show!

Subsequently at the special general meeting to approve the JBS merger, Chairman Mclauchlan revealed that the meat industry robotics profit was generated because the actual engineering work was farmed out to the parent Scott Technology company, and not kept within the respective joint venture. IOW, there is 'transfer pricing' going on. That makes the true profitability of meat industry robotics less than transparent. And it makes it very difficult to guess what sort of profit a 'scaled up' meat industry robotics program might generate. That is my cautionary note, and why I don't like overpaying for SCT shares! The one's I bought at cash issue time for $1.39 late last year are looking good though!

SNOOPY