redlight and others - I cannot understand the surge in SP the...

redlight and others - I cannot understand the surge in SP the past few weeks because at current prices and even at $2 a share the company is overvalued on current earnings and 2006-07 earnings of 7-8m NPAT. One has to realise that they produced a 4.5m NPAT for 05/06 with a significant percentage being loop 101 which ceases revenue generation in november this year to assess results. Just basic maths really but at 7m profit for 2006-07 with 90m shares and a current market cap of 230m odd this is a PE of 33 odd. That is IF they make 7m for this FY. At $2 a share the PE is back to 25 which seems more credible until we can actually see margins for installs improving to the bottom line.

All my opinion and now only hold a token number of shares to keep an interest as i believe in the long term view for redflex but at what point i jump back in will be determined by seeing in the next 12-18 months whether there is an improvement in the margins for all these installations.