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| Subject: ERG not out of the woods as yet. Seattle estimated to be of around same value as Sydney-before end April. | |
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Author: Thieved off Lost-of Ozestock-analysis of Sydney |
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Date Posted: Friday, February 21, 07:01:39am In reply to: 's message, "ITS---ERG Sydney 20/2/2003 parts 1 and 2" on Thursday, February 20, 02:48:32am Posted by: lost Feb 21 2003 8:32:48:733PM Reply to post #3902 by jvd Go to Post # ----------------------------------------------------------- ERG not out of the woods as yet. ----------------------------------------------------------- Likely impact upon market sentiment to be their results in the next couple of weeks. Market may not like them. Not sure what the six months to 31 December 2002 will be like. ----------------------------------------------------------- To explore the Sydney contract in a bit more detail, they will earn $94Million in revenue until implementation is completed in late 2004. Looking at previous results this contract has a 9.5% margin on it. If you break the implementation stage into five components then ERG will earn $18.8Million in revenue a stage or $1.786Million profit (attribute 4 months approx to complete each stage). Now that ERG have signed contract with NSW government work will begin and if they complete the first stage prior to June 30 then this will be in the full year profit. The estimated effect of the revenue and profit will be as follows: ----------------------------------------------------------- 2002-2003 ----------------------------------------------------------- Stage One completed - Four months $18.8Million Revenue $1.786Million Profit ----------------------------------------------------------- 2003-2004 Stage Two to Four - Twelve Months $56.4Million Revenue $5.358Million Profit ----------------------------------------------------------- 2004-2005 Stage Five - Four Months $18.8Million Revenue $1.786Million Profit ----------------------------------------------------------- If the above figures accurately reflect what ERG's price margin is the following would occur: ----------------------------------------------------------- On a 15 x earnings multiple $26.79Million will have been added to the market capitalisation. ----------------------------------------------------------- On a 20 x earnings multiple $35.72Million will have been added to the market capitalisation. ----------------------------------------------------------- However, in 2003-2004 financial year the following would occur: ----------------------------------------------------------- On a 15 x earnings multiple $80.37Million will have been added to the market capitalisation. ----------------------------------------------------------- On a 20 x earnings multiple $107.16Million will have been added to the market capitalisation. ----------------------------------------------------------- Presuming that the new share structure goes ahead (approx. 280Million shares on issue) and the base value of the share price is $1.50 or a market capitalisation of $420Million (give or take a few million dollars), then add the above 20 x earnings equals $527.16Million or $1.88 per share. If only 15 x earnings then $500.37Million market capitalisation or $1.78 per share. ------------------------------------------------------------ If you were to compare this price to the current shares then divide by ten and then add approx 3 to 4 cents above fifteen cents per share. ------------------------------------------------------------ These prices exclude the maintenance contracts due to long time until they are earned as revenue, plus I am unsure of the profit margin on this business. ----------------------------------------------------------- Also note that Seattle will be signed before the end of April 2003. Seattle is the same price value as what Sydeny is, so assume that another 3 to 4 cents per share could be added. ----------------------------------------------------------- When the new share stucture has been approved by shareholders each contract signing of this type will add 30 to 40 cents per share. ----------------------------------------------------------- None of the above includes estimated value to ERG of its Smart Card division. If there is good growth in the six months report then expect a higher share price if the market analysts recognise it. ----------------------------------------------------------- Best of Luck Lost ----------------------------------------------------------- ps, thanks for kind words, should also say thanks to Bonkers wherever he is at the moment. ha-ha-ha (Voluntary Disclosure:Position Short Term rating:Buy Long Term Rating:Buy) OZeStock Advertisment:"Get yourself an institutional advantage!" [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| SMH:Big slow on ERG ---Sydney. | sunline --of Stockhouse--a slow Sydney | Friday, February 21, 07:39:01am |