SSM - Service Stream

[ROE]

ROE...you still believe in the potential and future of this company?

I remember you noting you wouldn't sell for less than $1.50 due to the upside...still hold these reservations?

JTLP

Still holding, this announcement I wasn't expecting... a little disappointed and can understand why people hammer it.

oh well let see how thing go, better not have any more nasties or have to reconsider my holding
How can one division do so much damage hmmm could be crabby management

 

[aramis]

JTLP:

True on all facts.

However, those facts alone are not enough to bring that stock to the price that it is. For example: If you poured in $100,000 at .25, you would get 400,000 shares.

Assuming that they will pay out a dividend the same as prior year, that is equal to $14,000 in pure dividend money.

Anyone who doesnt buy this stock at this level is plain stupid. The stock has clearly bottomed and after 27 February 2009 (which is when they will announce dividend etc), it will probably be closer to at least 35 or 40 cents ps.

By the time record date will come, closer to 60 cents per share.



Pure speculation, yes. But, the fact is that if they do go ahead with the dividend, people will be rushing for it. AND, I suspect that the Board wanted to let the market know NOT to hammer the stock by letting them know that the dividend is anticipated to be the same... Otherwise, they certainly would not have stated that and most certainly not in BOLD.

 

[prawn_86]

Aramis,

Your challenge is to find me one small cap stock that has maintained its dividend. Most are cutting them, even if their earnings are good, citing a need to 'preserve cash for future opportunities'.

I dont know SSM, but i would be very surprised if they didnt cut their div at least a little

 

[aramis]

Prawn, we'll see on 27 February 2009.

Cheers

 

[JTLP]

JTLP:

True on all facts.

However, those facts alone are not enough to bring that stock to the price that it is. For example: If you poured in $100,000 at .25, you would get 400,000 shares.

Assuming that they will pay out a dividend the same as prior year, that is equal to $14,000 in pure dividend money.

Unfortunately Aramis...the facts speak for themselves...the price is where it is.

And I actually do believe that they are sufficient enough to result in SSM's fall. EBITDA increasing by only $800,000k? It equates to roughly an increase of 3.5%? And that (as mentioned earlier) is not the final profit figure...investors could get better returns on Term Deposits.

Cost overruns and delays on projects? It means less income and more expenditure...seems another valid reason to sell down...

Legal proceedings longer than anticipated...and very costly? Again...another reason to sell down...who want's a company blowing your hand earned cash on costly proceedings?

Anticipate Dividend...Just remember that CEO's etc are glorified sales people . If they came out and said "divvie will be lower" straight off the bat...coupled with that report...SSM would have rivalled the Titanic. "Anticipating" that the divvie will hold are some very choice words by management...they are not CONFIRMED so people DO NOT LIKE this. They sell...possibly due to the reduction on Divvie's not giving more than a SECURED BY GOVERNMENT BANK DEPOSIT

Global Eco Slowdown...welll duhh

Sorry if I come across rude...just pointing out some justification...

 

[Aka]

Well, as somebody already mentioned we have a week to wait.

I bought at .26 per share because:

1. Even if they pay divi of .05 (that is close to 30% reduction from 2008) that is .05/0.26 about 20% return.
2. Look at this other way even if they pay half or do not pay this year at all it is still good.
3. Cashflow will be strong in the second half and been impacted only due to hopefully non recurrent event.
4. they have contracts with mostly with gov. enterprises and revenue itself is not effected but rather due to one off effect Operating Profit
5. MOst of the cost is employee related/contractors - that is not really fixed and could be controlled with some managment skills
6. Critical element here is end of this month , here i really hope they will be very close to their announcment and would not repeat mistake (of surprising market) as they did withing 4weeks in January/Feb announcments.

 

[Aka]

Questions:


1.Which other companies (small&large cap) would be paying didvi of 30%?
2. Which othr companies would have PE ratio of maxmimu of 2?
3. Which companies have both ( one and two above)?

Wich companies do you know?

 

[aramis]

The stock is up 10% at the moment.

I think generally speaking, that after a stock has plummeted so heavily, people are cautious to get back into because you cant ever really tell when a stock has bottomed.

That is possibly why this has not picked up dramatically as it should be (only 10%?).

However, I think the market will be much more upbeat once the divvy is declared, in which case, you probably wont be buying at this price.

 

[Aka]

Small cap large cap - does it matter? sure by some, that is what Warren Buffett thinks about it.

http://www.youtube.com/watch?v=vwdoyw74_tA&feature=related

with SSM i like price very much and i like the fact that they are in the service industry plus i like (not fact yet but we will see in 4 days) they pay Dividents where yeld is close to 30% to current SP.

Well i bought today some at .25 . Honestly if it goes down i buy more ( imagine SP being 18c per share - well i buy more and get it back in dividents in 2 years +) as long as company is around and they will be around(they occupy niche market , with conrollable cost)!


There is some element of speculation but at the current price with Prifit level similar to last year and with divies similar to last year it is a true bargain.

My guess they SP will be around .29-.33 after divi announced this week!
With confidence returning it will move slowly up then...

Well at least i do not keep my $ in the bank at 4-5 % ! and i have some fun to hunt for good stock.

Happy hunting

 

[ozambersand]

Last night (Sunday 22nd) when I looked at Commsec trading seemed to be halted pending an "inquiry" however, I can't see any reference to that today.

Does anyone know what went on?

I don't think this referred to the ASX price query that was done a week or so ago.

 

[JTLP]

Last night (Sunday 22nd) when I looked at Commsec trading seemed to be halted pending an "inquiry" however, I can't see any reference to that today.

Does anyone know what went on?

I don't think this referred to the ASX price query that was done a week or so ago.

Pretty sure all stocks are in "Inquiry" mode over the weekend cause no trades can be made...

Aka...here is some food for though

I have not looked into SSM and the market they occupy...so I will take your word as good faith and believe they are in a Niche market with controllable costs.

BUT

When somebody is in a Niche market, other sharks start to swim around the fish. Would you leave the burger Empire to McDonald's? No...you build Hungry Jack's...same principles across all facets of business...when there is Niche things are rosy...but if another player starts to move in...things become a bit hazy...

SSM may have prime mover advantage...but if another company steps foot into their territory...you can see history for yourself

 

[ojm]

Considering purchasing some. Looking tempting at 25c each. Dividend could be good. Bad idea, good idea?

 

[Aka]

good expample of Kinetic Investment (melbourne based) sold off about 2mil of shares . That what has effected price so much.

They want to reallocate funds for the reason only they know.(investors asking $ back and so on)
I am holding and buying more, being small investor who can catch opportunities like this will be well ahead.

 

[aramis]

I am honestly feeling glad that I seen this when I did...

I actually think this stock will rise back to $1 plus within a year or two. Their shareprice is clearly just a reaction to uncertainty generally in the market and general panic.

FTR: I bought in at .28, .275 and .245

I will definitely be holding for at least a few months because as you pointed out Aka, this stock will likely go hard once divy declared and then slowly keep rising as more contracts etc are announced.

 

[Aka]

Does not move... , just intresting to watch the dinemics
First due to some fund request(possibly) big shareholder sold off small cap stock , some panicked and sold as well. Other got generally scared by macro news.

Now is is stable even a few is bleeding.

Intresting to watch some big cap stock effect of "update of profit forecast" profit forecasted 45-50% pee cent lower yet stock only decreased by 10-12%

but SSM it was opposite.

 

[honey85]

Bought some today at 0.24. I am quite skeptical whether they will maintain their div or not. I couldnt imagine the SP if they announce to maintain the div. Was there any similar thing happened in the past before? Like maintaining a div of about 15-20% after a big fall?

 

[nomore4s]

Bought some today at 0.24. I am quite skeptical whether they will maintain their div or not. I couldnt imagine the SP if they announce to maintain the div. Was there any similar thing happened in the past before? Like maintaining a div of about 15-20% after a big fall?

honey85, the d/e has nothing to do with the share price only the companies earnings, the sp could fall by another 50% and not affect the d/e, but usually there is a reason why the sp drops so much and this is normally what affects the d/e.

Going off the last release earnings should be good enough to maintain the current d/e (for this reporting period), if they don't it will mean that the earnings are below the profit guidance released last week and the sp will be punished accordingly imo.

 

[honey85]

honey85, the d/e has nothing to do with the share price only the companies earnings, the sp could fall by another 50% and not affect the d/e, but usually there is a reason why the sp drops so much and this is normally what affects the d/e.

Going off the last release earnings should be good enough to maintain the current d/e (for this reporting period), if they don't it will mean that the earnings are below the profit guidance released last week and the sp will be punished accordingly imo.

Thanks for enlightening me a bit. If they were to maintain their div, everyone will be rushing for a stake!: we shall see...

honey85
newbie

 

[aramis]

Honey85: Thats right. At the moment, people are a bit scared because the dividend has not been formally declared and therefore, there is a possibility that it may be reduced etc.

However, once it does get declared, the SP most certainly wont be opening at .25

Only a few days to go...

It should be interesting to see what the SP does open at and head to after the dividend is declared. My guess is still around .35-.4 simply because that is a great return.

 

[nomore4s]

Honey85: Thats right. At the moment, people are a bit scared because the dividend has not been formally declared and therefore, there is a possibility that it may be reduced etc.

However, once it does get declared, the SP most certainly wont be opening at .25

Only a few days to go...

It should be interesting to see what the SP does open at and head to after the dividend is declared. My guess is still around .35-.4 simply because that is a great return.

While I have been buying at these levels (small parcels) and would obviously like to see the sp increase, I think the market sentiment is very low for small cap stocks that are having earnings drop off. The market is pricing in a lot more risk for stocks like this even though the current yields are quite high, I think the market believes that companies like this will not be able to maintain the d/e in the longer term.

You need to also remember there are going to be alot of people who are holding from higher prices trying to get out on any bounce from these prices.

I think we will see some sort of bounce higher if the interim d/e is maintained but then we could see prices drift lower (back to 25c) after the ex d/e date. I personally will be happy to hold this stock for the long term from these levels provided it can maintain at least a 15-20% yield.