CAJ Shareprice, page-2

I agree. SP should be higher, but then again the market is usually right, but not always. My thoughts:

What's holding it down:
- I think CAJ is still suffering the hangover from the reckless debt fuelled over expansion. On paper they are still making a statutory loss, so maybe this is all potential buyers see.

- The shares outstanding is definitely capping price to a degree. Big number but not crazy. And the number doesn't really matter anyway, what matters is EPS. Nevertheless it may still deter buyers.

- Some buyers may be awaiting successful integration of the recent acquisitions. I don't know, but there may be some significant integration risk out there. And that's one thing that can bring a company down hard.

- Some fund or two may be capping price with there HFT algo's. I don't wear the tin foil hat with this stuff but it most definitely occurs, especially if a buy back is in play. Eg they interleave their buy orders in with the company buy-back orders, and then constantly sell them a pip higher and let CAJ slowly nibble at them.

- The psychology of recency bias. The market may lag the reality a long time; i.e take a while to accept CAJ as a worthy buy again after it's period of underperformance. Another current example would be aged care companies. Some of them may be a great buy now(objectively), but many people won't dream of looking at them after all the news.

- The fact it's going sideways. Many buyers won't touch it unless it's trending or breaking out.


Why the SP should be higher:
- I estimate a PE of about 17 after adjusting for one-offs and impairment of enlitic. IDX PE is mid 20's. And arguably we are in a growth phase again so PE should be higher than 20.

- CAJ is a defensive stock. IDX has done well in the recent world volatility, and so has the health care sector in general. People always need imaging. We're a sick western country.

- Minimal debt.

- More acquisitions.

CAJ is in some no-mans land. Whenever price reaches low 20's it gets bought back aggressively, but at 28 there's no buyers except CAJ themselves.