re: Ann: TEN Successfully Completes Retail En... I think TEN is...

re: Ann: TEN Successfully Completes Retail En... I think TEN is only worth about 20cps based on rough earnings projections.

From the CONCISE FINANCIAL REPORT For the year ended 31 August 2012

In 2012 TV made an EBITDA of $82.4m, and EBIT of $64m off revenues of $728m.
In 2011 Ebitda of $154m and EBIT of $136 off revenues of $852. (Good revenues that year).
In 2008 – to provide contrast – they made an Ebitda of $208, and $187m EBIT off revenue of $826m.
Ebit ratios go from 22.6% in 2008 to 16% in 2011 to 11.3% in 2012.

Apparently costs will drop $42m to $604m?
For the sake of illustration - assuming revenue stays the same at $728m (cost cutting makes an increase unlikely IMO), then EBITDA goes up to $124m, EBIT goes up to $106. Then the EBIT ratio has improved to 15% (due to cost cutting). Tax at 30% (not sure if payable or not – but assume 30% for underlying earnings) takes NPAT est to $74m/2312m ords = 3.2 cps. They may make another $1m after tax on cash of $45m – not material.

What if revenues continue to erode – lets say 5% off to $691m. Then EBIT is about $69m. Then it is 2.1 cps. So earnings are very sensitive to revenues.

So I think TEN is fairly richly valued at 34c approx. I think the economics will continue to decline. I’d normally be willing to pay about 14 times??? earnings for an ungeared sustainable business that has some growth prospects. However I think there is a chance that the business will not be able to grow its net profits – likely profits will be shrinking. So I’d give it (say) 6 or 7 times earnings – so somewhere around the 20c cap raise price. I can’t fathom the current SP to be honest.
I might be totally out of whack on my expectations. I note that Morningstar has EPS for 2014 of 1 cps (0 for 2013) consensus out of two analysts. I might be too optimistic.

Maybe there is a way extra value can be obtained from this business? I'd love to know how.

I shorted it - will see what happens. Lots of extra shares issued today.