big props from the speculator

David Haselhurst has got half a mongrel for this one.

Whether it plays out like he says or not, his article will have a short term positive effect on the sp.

**Article below (taken from Money.ninemsn.com.au)

This week I believe we’ve found a real cut-price special in a telecom/IT business about to reconstruction its capital, but punters have only until the end of this week to get set before shareholders vote next Monday (August 11) on a five-to-one share consolidation.

At a share price ahead of the vote of 9c, the shares are trading on a multiple of less than 3.5 times forecast net profit/share for the current 2008-09 year.

If directors’ forecasts are to be believed (and I have no reason to doubt them) the company’s shares should be due for a profitable re-rating in the week’s ahead. Shares bought at 9c and consolidated 5-to-one would carry a post-reconstruction purchase price of 45c. But if the shares are re-rated to a conservative price/earnings multiple of just 5 times current year forecast net profit after tax, they should be traded at 64c.

Although the author’s column has taken a plunge on 100,000 shares at 9c, that is not to say such a move is a recommendation to readers who should consult their own broker or financial advisor on the suitability of such a move. Remember the tears after the dot-com boom and bust of a decade ago? We’ll examine the company further below.

Entertainment Media and Telecoms Corp

This company listed on the Australian Stock Exchange in March, 2007, as a consulting business focusing on mobile phone applications, a market claimed by the company to have global sales of $US13 billion/year with annual growth of 25 percent.

The listing (out of an existing company with a sufficient spread of shareholders) involved a placement at 6c a share to raise $20 million from what the company described as nine “blue chip” Australian and international institutions.

The company then comprised a subsidiary in Malaysia (EM & T Sdn Bhd) and another smaller one (Sapio AB) in Sweden, which between them delivered a revenue of $7.1 million for the half year to December 31, 2007, and a maiden net profit of $5.1 million.

Towards the end of 2007, ETC (ETC.AX


EMT CORP6 August,200806/08/2008 10:39 Sydney, Australia.
Price Change % Change
0.094 +0.004 +4.440%

Company overview
Real-time quote
ETC.AX , 0.094, +0.004, +4.440%) entered into a binding agreement to buy a minimum of 51% and up to 100 percent of Malaysian company NexBis Sdn Bhd (Nexbis) for a total of $60 million.

On Christmas Eve last year, ETC paid $30.6 million for 51 percent, made up of $16.86m in cash and $13.74m in shares. (The cash component was largely raised through an issue of 175.2 million shares at 6.2c each to institutions for $10.86m.)

The company then predicted that the purchase of all of Nexbis could potentially generate $US84 million in net annual revenue to ETC by 2015 from its three present main areas of business — Malaysia, Thailand and the United Arab Emirates.

On June 5 ETC placed another 234,955,806 shares at 4c to raise $9,398,232. That enabled them to buy another 16.66 percent of Nexbis for $10 million and to extend its option for the balance from June 30 to September 30. ETC now holds 67.66 percent of Nexbis.

On the same day as the placement, the company revealed that the Malaysian Government had signed a five-year agreement. to buy the Nexbis product NexCode, a forensic level national security solution to be used by the Malaysian Immigration Department to track foreign workers and illegal immigrants in that country. ETC expects it to generate $60-$80 million (on a full year basis) once the solution is fully integrated. Negotiations continue to extend the use of the code to both the Home and Transport Departments.

Also on June 5, ETC released a forecast net profit after tax of $48 million for the year to June 30, 2009, up from its forecast net of $10.8 million for 2007-08.

The directors: ETC’s board boasts a combined 60 years of experience in mobile telecoms. Executive chairman John Houston ran operations as chief operating officer (COO) for Orange Thailand, Switzerland and Sri Lanka. CEO Dato Sri Johann Young spent 15 years with Orange and Hutchison, including a directorship with Orange World Asia. Dan Dumitrescu, MD of the company’s consulting business, was a former MD of Wang Asia, head of technology, Asia, for Korn Ferry, and global head of technology for Edward W Kelley and Partners of the US. Australian CFO and company secretary Peter Dykes was a founding member of KPMG’s technology advisory practice.

Directors have shown some confidence in the future with their out-of-the money option holdings. Between them, Houston and Dykes hold 31 million options, of which half will vest on December 1, 2008, at 10c, and the balance a year later at 15c. The options, of course, will be consolidated on a 5-to-1 basis also at next Monday’s extraordinary meeting.

Capital consolidation: ETC now has on issue 1,871 million shares which have traded this year from a low of 5.2c to a high of 11c.

Following the capital consolidation issued shares will amount to 374.2 million. Forecast net profit after tax of $48 million for 2008-09 will equate to net earnings/share of 12.83c.

Having bought at 9c ahead of the consolidation, the post-consolidation share cost will be 45c. At that price the shares are on a lowly P/E multiple of 3.5 times earnings. A conservative P/E of 5 times earnings would price the shares at 64c.