Hi Percy,
I had a little more of a look at KKT. The June microequities presentation is well worth a read. They seem to have quite a high level of awareness of their shareholders and their share price performance - although that might just mean they are taking the opportunity to talk about it while the going is good and shareholders are relatively happy with them! However, although heading in the right direction, I don't see too much certainty for an improved profit in current year.
Firstly, they will have to be tax normal in their reporting (though not cashflow), although I allowed for that in the P/E figure of 7.9 from my first post. More worryingly was the statement in the May presentation that the last quarter profitability was being impacted by "file portability in NSW as a result of the recent tender". So not only bad news, but bad use of jargon to soften the meaning. The degree of bad news is borne out by the "balanced scorecard" charts that show April as being particularly bad. On the other hand, they appear to have won a Queensland tender in July, so perhaps that will balance it out? The outlook statement in the FY result remains positive, albeit in a rather optimistic, broad-based way (i.e. we're aiming for organic growth, we're putting together some new product offerings, we might make some acquisitions). I'd be reluctant to read too much into it at this point and would prefer to wait until half year, where they will likely struggle to beat the strong pcp.
As an aside, came across this interesting slide in their May presentation which is worth considering when looking at the profitable micro-caps and trying to create some sort of price benchmark for them:
Originally Posted by Lizard
Hi Percy,
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