Tuesday, August 15, 2006

FUN Further analysis

Another update on the books of Funtastic Limited.

I have been reading through the new share purcashe plan. It should retire approx 10 million from the debt of Funstastic Limited. This will save approx $500,000 in borrowing costs. If they get a greater uptake on the purchase plan it could be as high as 40 million which would reduce the debt level to only 12 million and would save $2 million in borrowing costs.
This all adds to the bottom line although it will be diluted as more shares will be available.

All up I think it is a good decision and I don't see too many negatives with the company. They are going through a difficult trading peiod but are still showing increased sales. Hopefully this continues through the christmas period which is the most profitable season.

All up I think the company is still worth holding at these levels and even with a 10% reduced EPS for the year it is still undervalued considerably. They have kept the dividend intact which is a good sign and should hold the share at this level. The divi for this is 4c ff which equates to a 5.7c unfranked dividend which is a yeild of 3.3% ( 6.6% p.a.) for our purcahse price of $1.725

Good Luck Investing ...

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