speculator mention... again

Electro-tech company’s profit up 145 percent

The financial pages of the major newspapers generally ignore reports from smaller companies, even when the results are outstanding.

Such was the fate of one of our portfolio punts when Entertainment Media & Telecoms Ltd (ETC.AX


EMT27 August,200827/08/2008 10:43 Sydney, Australia.
Price Change % Change
0.465 +0 +0%

Company overview
Real-time quote
ETC.AX , 0.465, +0, +0%) reported on Monday a big turnaround, with net profit after tax (NPAT) up 145 percent to $11.65 million in the year to June 30.

Better, the result exceeded the company’s guidance to the market of a $10.8 million profit by 8 percent, with second half NPAT up 28 percent on first half earnings of $5.1 million.

We added EM & T to the portfolio on August 1 after buying the stock at 9c ahead of a five-to-one share consolidation, which reduced the number of issued shares to 374.2 million.

On the new capital structure earnings/share on the latest year result amount to 4.05c, putting the company at a price of 45c a share on a multiple of 11 times earnings. That is probably fully-priced on the 2007-08 result, but...

Executive chairman John Houston confirmed in Monday’s announcement that the company maintains its 2009 guidance for a $48 million NPAT — or 400 percent up on the latest year.

The growth engine is the company’s 68 percent holding in Nexbis Sdn Bhd, a company supplying advanced security solutions to the Malaysian Immigration Department, together with other operations in Thailand and the United Arab Emirates. Most recently EM & T announced that Nexbis had received a letter of intent from the Vietnam Road Department for an agreement to renovate and manage that country’s 23.7 million driving licences using Nexbis’s high-security Nexcode system. That allows an internet capable camera phone to retrieve and display secure data using two-dimensional bar codes printed on identity documents.

International patents have been filed in 11 countries including the USA, the European Union, China, India and Australia. Nexbis’s 2D codes have been endorsed by the US Department of Homeland Security and distribution is being established in the US for mobile banking applications.

EM & T has an option to acquire the balance of the 32 percent of Nexbis it does not already own by September 30.