Wednesday, December 20, 2006

Equity building at MFS

MFS Limited announced $A120 million of fresh equity. The company has taken a view of promoting itself as a small investment bank and has upgraded its economic forecasts at the same time as announcing several new deals. Its recurrent after-tax earnings will reach $0.35 per share, an increase of $0.04 on previous forecasts.

Some of MFS's acquisitions include S8 and the Saville Hotel Group, and it has stakes in a Melbourne property group and a New Zealand financial adviser. It has been noted that it has poor Institutional support but to me this is a positive as it may be a target in the future and stakes taken by an institution will push the price up.

The company is sitting on a PE of approx 13 and a dividend yield of almost 5%. It is a share worth considering as it may be slightly undervalued and there is a good chance of a significant rise if institutions buy into it. You should also note the genreal trend of this stock is in the right direction (UP).

Good Luck.

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