Just some thoughts*If you had a bad rash would you post a...

Just some thoughts

*If you had a bad rash would you post a question on a forum or would you go see a doctor? If your a shareholder of a company and your concerned about their auditors you should get in contact with ASIC and look to see if they have any negative history with past services and/or get in contact with the auditors.

*Theres a really good book called Synergy Trap. Theres also alot of literature on acquisitons but the main idea is that synergies through acquisitions hardly ever create value and the biggest determining factor is the initial purchase price. CIA's purchase at 0.6x FY 2011 NPAT is pretty good as a stand alone business purchase let alone a synergy purchase. But who would sell for 0.6x NPAT? There are many private purchases one that springs to mind is Warren Buffett private purchase of Nebraska Furniture Mart at 2x EBIT which is a disgustingly cheap purhase. Money might not be the biggest driving force for the seller or they could see that by selling the business they could unlock more value we dont know. If one was suspect about this deal one could get in contact with CIA or Allmine.

*Forecast $16.5M NPAT, Quarterly cashflow $21M, annualised $84M which is approx 50% forecasted revenue ($150M), Using 50% Forecast NPAT of $16.6M thus $8M , 350M shares outstanding, 8/350 = 2.3cents. Current market price 14c/2.3c = P/E 6.3. Downside reduced upside pretty good if they hit their forecast. Is there a company with P/E of 6.3 currently selling with bright future prospects? There is a couple at P/E = 8 but not 6.

*Its good to see management dont upgrade forecasts. I prefer conservative management. Jim Chanos has inferred that there will be trouble with China in the future as well as Seth Klarman (one of the greatest value investors). These guys get paid for being right.

*Mr Walkem has been using stock for acquisitions at 20c a share and only 20c. I think 20c is fair value. He has 15years M&A experience and what I can judge he is doing a very strategic job at building shareholder wealth.

Im currently on holiday but these are just some rough thoughts and figures.