Forum Archive Index - August 2000

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

Hi 

Having fun with your FFS - I'll stay out and have a chat about something else 
closer to my wallet.

I have been critical of ADV in the past - mainly because it is hard to pull out 
the real bully from all the hype. I still feel (not based on deep research) 
that at current prices ADV is still speculative. However will try to find time 
to a bit of study soon on ADV.

One of my deeply researched investments (research and a true understanding of 
what you are putting your money into is vital if we are serious for long term 
investing - trading on the short term rises is another matter) is Renaissance 
RNS . Noticed the strong rise over the last week or so - from hovering around 
the 55-60cents mark in April thru June at the current price of 89 cents it is 
starting to show the real value there is in this company.

I do recall some chatters thinking DFM were a bit ahead of themselves when they 
valued the share at #1.35 odd - we'll see. I have confidence.

Both RNS and ADV are moving from more traditional businesses into a e-commerce 
model - one of the differences is that RNS is a lot further down the track. 

Such a change in direction needs a high level of investment. This comes at a 
cost and impacts on short tern earnings - hopefully yo deliver higher earnings 
later.

With the growth rates that RNS have achieved in providing web and internet 
services the payback period for the 'lost' earnings through the investment 
stage is shorter than most expected.

Back to ADV and the $40M of goodwill they have on the balance sheet - if the 
revenues do grow to $100M next year as stated and margins improve their 
'normalised profit' (dare I say it) could be anywhere in the $15-$20M range. 
Expensing another $3M of goodwill will still leave a lot greater profit than 
this year - that is the real value of the investments coming out.

How much of the future profits are built into the ADV price I don't know? But I 
am sure that there is lot to get out of RNS yet.

I'll have to do some more research and thinking around this - however has 
anybody else done any sums on ADV or have a view.

Peter

Hold RNS, been tempted with ADV but something tells me otherwise.

PS do read the story as to what might have happened to ADV if they had tried 
announcing profits like they did in OZ - would have been crucified.



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