Member Info for TryThinking

The directors have done a decent job of running this company and I for one am pleased that they do not pander to those that want reports on everything. The market capitalisation has grown and the outlook appears good for the business. EBITDA at $8m means this is valued at 2.5 times EBITDA so plenty of upside and we are going to get a dividend return of about 4% too.

I expect the new man will have lots of ideas and plans but insufficient funds to make much of it happen. Hopefully he will be able to persuade someone with plenty of money to lend £30m based on his historical successes. Failing that we will see plenty of shares issued.

Imagine a business with £12.5B of revenue and £8B of costs and a profit of £4-5B pa. This is RBS once it has finished paying for the past and paying a dividend of say £2B pa What is a business like this worth? I think £60B plus, which is double the current market capitalisation. How long will it take to get there?

The rights are still nil paid so likely to be a bit of settling down for a while. If management have got to the bottom of the problems and stopped the rot then these could quite quickly get back to 250. If not then another drop will occur. Not enough info yet to decide which way it is going.

This business is in quite good shape in terms of debt, profits, dividend and in my view is very much undervalued. In my view the market is discounting poorer performance, no improvement etc. This does not make much sense to me so perhaps it is possible Mr Ashley wants to drive the price lower for an eventual bid? Look out for when his shorts start to expire or he starts to cash them out. Or is it just a hedging exercise for shares he owns already? Anyway my view is barring a collapse in trading these shares are good value

Correction - take care

Be careful guys. Debt is a bit high and looks to be mostly in $ and Euros so is now even higher with the £ decline. looks to me as though they will have to slice the dividend a bit or all of it. Wait and see would be my strategy as it normally takes a while for companies to realise the full extend of their problems and requires 2 or 3 reportings to get it into the public domain. Should be a good company once back on a stable footing but probably will drop further especially when debt/earnings/loan covenants become an issue in 6 months time. For me this is a good opportunity just not yet.

It looks quite positive as the forward profitability on the forecast cash costs per ounce at current gold price per ounce looks encouraging. Also looks to me as though it will remain cash generative going forward. However as always please make up your own minds.

The options are simple, sell and lick wounds or hold and hope. There is at least a possibility of survival or some return to shareholders with the plan outlined.