Supply Network – A 2011 winner (SNL)

After buying last November around the 42c mark, my only regret with SNL is that I didn’t buy more.  After rocketing up to 72c and paying out another 9c in fully franked dividends, I’m sitting on close to a 100% return for the year with a company set to continue performing.  Based on the discount method for Capital Gains Tax calculation, I could sell now and realise a 50% discount on my 30c capital gain.

 

So should I do nothing, sell out, or add to my position?

 

The company currently sells for 9.2 times earnings, and the 5c of ordinary dividends corresponds to a yield of 6.9%.  Normally figures like this would be the result of a beaten-down share price due to problems in the company, but with the aforementioned appreciation to the share price this year, this is not the case.  Gearing is 21% with Operating cashflow of $3.1m. Longer-term, the growth is forecast at 7% per annum, with next year’s growth targeted at 10%.

 

With all of these factors in mind, I think it is reasonable to consider the business as still being undervalued and having excellent future prospects.  For these reasons I am going to add to my position in SNL.

2 thoughts on “Supply Network – A 2011 winner (SNL)

  1. Hi Chris

    On initial view the share buy-backs are a good sign and the company is selling for roughly 50% asset backing. I don’t know much about the property business but on the surface it looks to be worth further investigation.

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