Forum Archive Index - August 2000

["Peter Maiden" <pmaiden@today.com.au>]

Rini

Thanks - things are heading in the right direction.

I haven't classed ADV as 'trashed' yet so didn't even consider any trading this 
stock. I still see it drifting down further.

I am uneasy with the current price anyway. 

Last year I was amazed that a company with $30M odd revenues could get into the 
NZSE 40 - but then that is result of valuing a stock with a PE at near 30 odd. 

Even now with revenues of over $60M the companay still has a market cap of over 
$170M and based on the last years performance has a PE of near 45 at the moment.

IMHO forecast revenues are not sufficient to warrant such a high expectation of 
future earnings. The business needs to carry the high amortisation for some 
years, now incurs a considerable interest expense and shortly will have used up 
tax losses.

Even though the expansion into e-commerce has been well publicised a lot their 
activity is still what I consider 'activity' based (as opposed to new 
technology things)and as such future margins will not be much greater than that 
being experienced now.

A pity that that the hype and all that went of the rails the other day - but 
that is the risk of doing things that way. They now have a difficult job in 
getting back the faith that a lot of people had them. Being tarred in this way 
can sometimes take a long time to get over - and in this case they have hurt 
some punters where it hurts - in their pockets.

Pity though because the company has a lot going for it and is doing a lot of 
good things beyond EFTPOS terminals.

Too risky for me at the moment. Maybe reconsider when closer to $2.

Peter  

Disc - never held stock - been tempted at times but not at the present time

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