After down 8%, P/E still 28, too expensive, page-27

Thanks for your post neoteric. I should have listened to the 1H2017 results teleconference before posting on Sunday ... but the link wasn't working! Anyway, the teleconference confirmed that Hansen has a significant 'natural hedge' in each foreign country eg in the UK, billings in GBP are offset against operating expenses in GBP (such as salaries, rent, electricty, insurance etc). The teleconference also stated that Hansen only 'brings back' foreign cash to Australia 'if absolutely necessary' and I think these 'realised' amounts are shown on Page 7 of the Financial Accounts under 'Exchange differences on translation of foreign operations'.
1H13 = $0.820m
1H14 = $6.156m
1H15 = $2.795m
1H16 = $1.573m

It would make sense that they converted US to AUD during 1H14 ($6.156m) when the AUD:US exchange rate was high. Any accountants out there?

It also seemed clear from the teleconference that FY17 revenue guidance ($165-175m) is 'conservative', as 1H17 revenues ($86.9m) are already at the top of the guidance range with a full six-month contribution from HiAffinity (compared with only 2 months in 1H17).

With nearly one-third of 2H17 complete, my 'back-of-the-envelope' analysis suggests 2H17 FX reduction in revenue will be slightly less than the $4.4m reported in 1H17.

I plotted the AUD/GBP exchange rate over the past 2 years, drew the Hansen average rates for 1H16 (0.4713) and 1H17 (0.5897) and 'eye-balled' values for 2H16 (0.52?) and 2H17 (0.61?). Still volatile but not quite as volatile!

I plotted the AUD/US exchange rate over the past 2 years, drew the Hansen average rates for 1H16 (0.7231) and 1H17 (0.7536) and 'eye-balled' values for 2H16 (0.74?) and 2H17 (0.76?). So slight reduction!

So will Hansen upgrade revenue guidance (to say $170-180m) over the next month or two? I think not because of the volatility of the exchange rates particularly AUD/GBP. I will be checking the AUD/GBP and AUD/US exchange rates for the remaining four months of 2H17!

As a final note, average exchange rates tend to be self-correcting. The higher AUD/GBP and AUD/US exchange rates for 1H17 and 2H17 (est) will tend to reduce the FX reduction in revenue as early as FY18.