priti13 Aug 2010 16:34
It certainly is a scary time to be in SCHE but, for what it's worth, this is my take:
1) If this sector didn't exist someone would invent it. We have an ageing population and nursing home provision will be essential in the future.
2) The business model that worked pre 2008 needs to be reworked for these austere times - that is the key challenge for the sector and will be what the management is trying to figure out.
3) It looks as if SCHE was slow to respond to the changing times and that is their failing. It has lead to anxiety in the market, especially in the context of CNT and ROK. This gives professional investors a perfect opportunity to weed out the weak holders and increase their stake on the cheap. That is, I believe, what's happening here. This is the capitulation stage of the bear phase.
4) Broker recommendations always have a justifying argument but, in the end, they are examples of wish fulfillment - frighten people with a valuation of 10p per share and, guess what, some PIs sell in panic and the broker cleans up. It's a game of chicken.
5) Sell if you see a substantial downside form here, otherwise hold unless you can see a better opportunity elsewhere.
All IMHO of course. Cheers and GL.