Originally Posted by
Lizard
Okay, decision day; am I going to take up any spp shares?
So far, since paying far too much for my WDT shares a year or two ago, I have avoided participating in cap raising. (Probably should have since most of them could have been sold shortly afterwards for a fair gain! But have this one in long term investment portfolio).
I doubt that WDT will make a significant profit (probably actually a small loss) in 2010. My best guess for 2011 is that they achieve NPAT of $7m assuming no major business disasters. Based on shares on issue of 648m post raising (conservative, since 75% uptake in spp seems unlikely), that's 2011 eps of 1.08cps. Put it on a P/E of 15 and the shares would be trading at 16cps post result. I'd want at least a 25% pa return on investment - so working back from 16cps over 2.5 years (now till profit announced), need to get shares at no more than 9.2cps. Based on the last 5 days trading, that looks okay. Although institutional holders might try and push the price around next week to make sure small holders don't get a better deal than their 10cps.
Big question as always for WDT is will this be the last cap raising? The calcs are only valid if it is and it looks a bit tight. Plus, despite strong growth in revenue, WDT have a record for over-optimism rather than conservatism.