Well - they are up 16.3% today on good volumes. Not everyone seems to agree with you...
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All I hope is that Hunterhall have more information than we do about how WDT's cost reduction programme is going. Hopefully it is positive and swayed their decision because it won't take long to burn through 8 million as their sales continue to increase unless they actually DO significantly reduce the cost of each unit sold rather than just talking about it!
Fingers crossed they will produce some figures around this when they come asking for more cash rather than just using fluffy words as they are soooo good at!
I didn't participate in the last cap raising as it wasn't underwritten and their figures seemed hugely optimistic.
I wonder if the one announced today will be?
There are a number of things about this company to wonder about...
.....hunterhall are hardly going to throw $8m at any company without firstly having done their due diligence..............................surely????
Maybe 3rd time lucky for HH .... after losing zillions on Feltex and NZ Farming Systems
And this is pretty heavy averaging down for them as well
Green all enthusiastic and optimistic
http://www.nbr.co.nz/article/welling...aisings-110781
Hunter Hall taking 85 mill shares is pretty dilutive for existing shareholders ... so sahre of the huge rewards being watered down for many
Though I was surprised to read this a week or so ago - "The largest disappointment of the result was the announcement that the Panasonic deal that WDT had been working on has fallen over," Harvey-Green says (from Forsythe Barr)
Hopefully no other things WDT had been working on will fall over
winner........what is a "share purchase plan" and how do you think it will effect the share price?
A share purchase plan is when the company gives shareholders the opportunity to buy more shares in the company.
In this case Hunter Hall are to take 85 mill shares at 10 cents and WDT prob thinks its a good idea to offer other shreholders some ahres at 10 cents as well.
That 85 mill shares Hunter Hall doubles the number od shares they have at the moment so they will end up with more than 30% of the company - about 10% more than they had before - that is how much existing shareholders interests have been diluted by - no wonder they think they need to offer you some more
Interesting article in the SMH this morning that says most of the recent capital raisings have ripped off retail investors .... but some retail investors have made windfall gains (like the writer who has made $214k gains on his portfolio of $40k) ,,,, but further down the track they have less of the company than they originally had
http://www.smh.com.au/business/aroun...0915-fo18.html
Hard to see windfall gains from a SPP with WDT
I try to look at WDT periodically to see if it ever looks like a good investment. Given the revenue growth rates, it has potential...
However, the crux is that it is difficult to ascribe value until the company becomes self-funding and ceases to raise new equity. Picking the last capital raising before profitability seems like a possible fundamental entry (and perhaps before positive free cashflow - but best I don't complicate my argument!).
So my questions at this point are "will this be the last capital raising?" and "will they book a profit in 2010?". Looking at the accounts, the current proposed cap raising looks likely to get them through to at least HY 2010. Which may be all they need if things are running on track. But will second half be profitable?
The figures in the interim report have me dubious. Looks like they were hoping for 25% gross margins on the motors in the second half with new, lower cost, inventory, but currently only sit at about 15%. Operating costs for the year to date are at $8.9m (ignoring forex losses) - they claim these will fall in second half due to restructuring, and forecasts suggest about $6m second half. Therefore I'd pick at least $12m op costs for FY 2010, plus the $2.1m in D&A. So to book a positive EBIT, they need to cover $14.1m of expenses. At the (more optimistic) 25% margins, that means sales in 2010 have to escalate to at least $56m - about double current year forecast. This is possible, but seems tight - and unlikely that they'll blow everyone away with their result. More likely to disappoint (again!) with a loss of $2-4m for 2010.
So could be waiting another 12-18 months for the potential to emerge - no wonder they want a cornerstone shareholder like HHL as defense against hostile takeover. After throwing over $80m of capital at this business over many years, it would be a shame to see NZ investors give it away for less - they can probably get it there eventually - if they're not forced to issue new equity beyond this round. Beyond the "break-even" mark, their sales growth should make for an eye-catching profit increase. But might be waiting another 2 years or more to see it...
MacDunk,
Summary of WDT revenue:
FY02 $0.3m
FY03 $0.8m
FY04 $0.9m
FY05 $1.8m
FY06 $7.1m
FY07 $10.7m
FY08 $14.5m (reporting period changed)
FY09 $27.1m (forecast)
While you could say that they've extracted money from the gullible to get here, at least they have managed to produce the goods and investors still hold a stake in the outcome. They've typically increased revenue by 75% pa over the last 8 years. Eventually, they will achieve the scale to become profitable. Sometimes I have a suspicion we NZ investors undermine our own market and businesses with our overly-cynical attitude.
In a market more willing to provide new capital for development, the dilution would be less and the early investors better rewarded. Furthermore, if investors are not supportive in providing development capital, then that is one less reason for a company to take up a listing.
Whether a company should or shouldn't be supported in the capital markets comes down to whether the returns on capital invested are ever there and over what time frame. In WDT's case, it looks like the answer might be positive - but in a very long time frame for that early capital. More recent capital has a much better chance of seeing a positive return within 2-5 years.
For the active traders though, the sweet spot probably falls about 6 months before the sales growth kicks into the profit line and we're not there yet.
Agree Lizard. I was a relatively early investor in WDT - I sold a couple of years ago.
Sadly scientists in all their guises (bio-tech et al) are crap capitalists and they will not be getting any more of my money.
Crikey!!! A company turning over 10.7 and 14.5 million big ones respectively,AND still not profitable??? Where does it go? Paper thin margins?
Don't know this co.but at a glance at those figures,I don't think i would want to be IN.
I see they are calling on the shareholders for more funds.
This is starting to become tiresome without starting to see profits or shareprice growth.
BUT -Check out the growth in revenue. Lizard's post a while back illustrated the rapid growth these guys are achieving. I hold, and will be taking up my full entitlement under the SPP. That said, it is coming down to the wire regarding turning that growth into a decent return for shareholders.