Manny100, I think the analysts misunderstood the company for a benefit. I think CTD is being very selective with their words as if you say someone is purposely misrepresenting the facts, that in itself can lead to significant legal action. That is in the same way VTG is with its wholesale research "opinion" trying to make it in a way that they believe should have no legal repercussions.
https://www.theage.com.au/business/companies/vgi-faces-shareholder-lawsuit-over-corporate-travel-ambush-20181102-p50dnf.html
VGI's managing partner, Robert Luciano, said it would "create a terrible precedent" if Maurice Blackburn took its investigation any further.
CTD was trading on high PE multiple which meant that any bad news would be amplified. Bad purchase, missing numbers, etc but a short report which does not look like they took enough time to ask the company questions, or verify material points that simply appear to be incorrect is not excusable (i.e. revenue recognition, cashflow numbers, comparisons with other travel businesses that are not like for like etc). To me I think maybe it shows that they did not care about the report, just the outcome and knowing it would leak to the media and then they could comment openly.
I hope that this does lead to legal action against VTG. I have no problem with a short report but the firm should have a very high onus of obligation to ensure that there research is verified to the highest level (VTG - are sophisticated wholesale investors with access to the company, and highly skilled staff and experts). Retail investors generally do not and do not have the time to read and consume all the relevant information required, they know this really well and have done it to manipulate the market.
Can I say that how is there a problem with goodwill then they have purchase as per VTG's report over $500 million of business. Buying them on multiples of between 5 to 10 times and the company trades between 17 to 40 times, as long as they manage the acquisition effectively which on the numbers they have there is still goodwill.
$500 million of purchased businesses the company currently only has a $126 million in a debt facility. If they hit there expectations of profit in FY19 that is a little over 1 x Net Profit after tax. It is those businesses that have been purchased that the growth has been created from so why should their be a big write down of goodwill. 4 times profit NPAT in goodwill, this is not a situation like woolsworths with masters where they are operating a business losing billions with huge capital investment or BHP buying US assets for $25 billion and selling them for less than half that when most of them were not profitable due to the oil price colapse.
The market isn't rational, I just think that reports like this need a lot of regulation and guidelines and huge punishments if found to be ingornant, misleading or deceptive for a financial gain (the punishments should go against the directors personally as well as the company). Will get short reports but at least the market will know that the directors of the shorting company have 100% confidence in the report and its finding not just throwing mud hoping it will stick.
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