PRG trading on a PE close to 10x and surely the merged company is an entity that is worth trading on at least 10x. SKE appears to have suffered from the perception that it is mainly a mining services company.
I'm not to proud to say that I got 'caught' holding SKE when the mining bubble burst - and then hung on to my own belief that it wouldn't be treated as a mining services company. Lesson for all. No matter how strong your belief, if the market obviously doesn't agree with you - accept it. Low PE and high div payment but the price still fell. History.
Future. Merged entity is worth more than the current values indicate. Todays SKE report is a relatively pleasant read. Underlying EPS 23.0c. We will be merging a SKE that has taken its medicine, cleaned up the books, $60.0 million non-cash fair value impairment charge, FY15(net debt/EBITDA) was 1.4x (FY14: 1.8x), in Workforce Services; "Overall, margins have been stable since Q2 and margins in mining were higher in the second half than the first half, reversing a negative trend. Across Workforce Services, there was an improved revenue trend in Q4".
On the downside the Gorgon project is wrapping up.
SKE Price at posting:
$1.65 Sentiment: Buy Disclosure: Held
