The 40 mill bond they gave out was for 'growth' they said. They needed money for all the new projects they had in the pipeline. Wow, it has been so, so many months with no new project. I checked PEA and they, similarly, simply have no new projects.
Now the 40 mill is at 7.5%, so they will pay $3 mill a year in interest (starting in May this year).
With no updates and no changes to last year, the bottom line for 2019 will be just below 2018. They predict a 2 mill or so increase in EBITDA. But 3 mill will be add on for interest, and there is a lot of Depreciation, I guess (I note the video above). So, I will guess the EPS may fall this year. In fact (again re the video above) they may need to start paying a dividend which 'looks' unsustainable based on EPS.
I am not sure it is good management to spend up on capitalisation if the returns are so low. I mean, if the company GROWS, but makes less money, it is not a good look. EPS next year will look very interesting (low). And that is fine, as long as they start paying a dividend.
So.... my recomendation: they have enough money in the bank to expand, but they have no new contract. Oh well. Let the EPS fall from 8 to 5, but pay a 4 cent, franked divvi. 4 cents franked on 70 cent share price, is very nice. THEN perhaps some new contracts will show up one day and over the next few years the company doubles - and my 70 cent average price is yielding, say 10% franked. That is my plan! I hope the management of the company are on board with my plan!
ZEN Price at posting:
67.0¢ Sentiment: Buy Disclosure: Held
