Maiden Profit, page-53

My 2 cents: Well reading through the recent Half results, seems like the future's indeed promising. And Burgo and the Team keep on delivering - that fella's been a Godsend and has really turned QHL around. If we continue to believe him, which I think he's earnt, the market should keep rewarding QHL over the next few years as the promised Contract awards roll in, JSF keeps ramping-up, etc.

Considering that a large chunk of the recent profit result was Accounting charges, and that the cash flow's negative and large debt outstanding, there's still a lot of work to do though. To be fair, this machine outage really muddied the waters - per their comments, ~90% of the Op. Cash flow deficit was due to inventory build up, due to the machine outage and will normalise over the coming months. If I'm understanding this correctly, that seems fair - if you've bought all this stuff expecting to use it up and now you can't, you're not going to see the cashflow out, from the sale of the finished product. I assume they would have postponed deliveries of more raw materials, until it was back under control? If so this should improve cashflow considerably in the next Half - they won't have all the raw material spend and they should realise the finished product revenue. But they also said the machine outage will impact the current Q (I assume negatively?). Anyway my point is, that this event has really muddied the waters on the underlying QHL story (i.e. that they've righted the ship) - so we'll just have to keep waiting for that to play out, in the upcoming results. 

Having held QHL a long time, I'm at a position where I don't really get too excited about the "game changing growth" sales line anymore. I can't deny it still exists, but I heard that in 2005 when I first invested in QHL (what a rubbish investment decision haha) and I'm still hearing it. Granted a lot's changed in the meantime, but there it is. What I want to see, is financial evidence of QHL's success. That's been long elusive and is sorely required to 1) be profitable (specifically through good cash flow) and 2) reduce the debt-load. It seems to me QHL are on the right track and know how to achieve this - as I said, Burgo has really gotten this under control and he's promised "further material improvements in operational efficiency", which should result in additional reduced expenses (assuming they don't require a large CapEx investment, to get them?). 

My plan is to do a bit more homework on QHL's debt obligations. If that appears manageable over the next few years, I'll look to buy on SP dips. Despite all the recent (and finally!) positive SP movements, it may well get back into the 7's once the hype dies off - then I'll be interested. I've no doubt if what Burgo's promising comes to pass, QHL SP will be significantly higher in a few years - which will finally reward 'patient' (think stubborn and naive, at least at the time of the first purchase haha) LT holders like me. GLTA.