SCT - Scott Tech

[Snoopy]

We are now only two weeks away from the half year profit announcement.

The actual numbers in the half year result will be irrelevant. Of much more interest will be the outlook and whether SCT has a sufficient pipeline of work to keep that workforce idling along.

Long term I think SCT shares are worth much much more. But shareholders will need to ride out the industrial appliance cycle to crystallize that value. In the meantime from the value investor standpoint, I would quite like the SCT share price to go lower. Will I get my wish?

The half year result is out and it is poor as expected. The 'as expected' bit accounts for the share price going up slightly now the result information is in the public realm. So I didn't get my wish of a further (short term) share price decline :-( .

Part of the 'excuse' for the $0.5m half year loss is that the period includes significant costs and disruption due to the relocation of the Dunedin facilities. 'Other' expenses are up $1.1m over the corresponding period a year ago. Of course there is no way to know if all of that 'other' expenses increase is due to the move. But IMO it is a fair assumption that in an ongoing operational sense, SCT are not losing money.

The assistance of Scott Euro in winning a major project in Europe means that I would be surprised if SCT are looking at laying people off. That is the best news that shareholders could have hoped for in the current economic climate. I intend to keep hold of all of my shares as a result.

SNOOPY