Agree wholeheartedly N.Taylor. Morley is doing no more than applying a Porter analysis framework. High margin business - is it sustainable? what are the barriers to entry etc. Economic theory tells you that new entrants will be attracted to high margin businesses. As Morely rightly points out, what exactly is ETC's IP, can it be easliy replicated because if ETC's IP can be confirmed and cannot be easily repeated then the company is the real deal. Having said that, we shouldn't forget they do have contracts and a pipeline of recurrent income streams for years to come. Provided the contracts are honoured and executed, then we're still looking at a company for a forward PE of around 2. As I said before, the next couple of weeks will be critical. Provided there are no nasty surprises, then I expect the share price to respond favourably, particularly if a dividend is declared.
Red2
ETC Price at posting:
39.0¢ Sentiment: ST Buy Disclosure: Held