first equity report :-)12 Apr 2019 16:53
Excellent Valuation Entry Level
There are several important aspects within the interim financial statements that we believe require highlighting:
- A$ 0.47m share based payments were incurred (being bonuses for directors for achieving certain milestones)
- A $0.49m loan impairment was incurred
Stripping out these one -off payments,loss after tax for the six-month period amounted to only A$0.84m
. Moreover, using management’s revised guidance of breakeven at the PBT level for the full financial year, we can deduce that it believes the Company is on to make a profit before tax of A$1.80m for the six month period to30 June 2019.
Stripping out the aforementioned one-off costs incurred in H1, management has effectively given guidance that the Company is set to record an underlying profit for FY 2018/19 of A$0.96m.
As at 29 March, Harvest was already half way through the second half of its financial year. Accordingly, we suggest that management must have a fairly accurate idea of the sales that it will achieve in just the next three months, and resultantly that its revised revenue forecast is readily achievable.
net cash balance also lends a great deal of comfort. At 31December, it was A$11.9m. It also had trade debtors
of A$1.0m representing the cash it was yet to collect from its initial sales made in H1 2018/19.
Assuming that the revised consensus forecasts are met,that balance will mark its low point going forward, with positive cash generation forecast for H2.
:-)
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