RE: reasonable P/EStrategic Vista up after acquisition completion
Thursday October 2, 12:53 pm ET
MONTREAL, Oct 2 (Reuters) - Shares in Strategic Vista International Inc. (Toronto:SVI.TO - News) gained 20 percent on Thursday after its unit Strategic Vista Corp. completed the acquisition of a competitor, Mansoor Electronics Ltd.
Shares in the Toronto-based security monitoring firm rose 28 Canadian cents, or 20 percent, to C$1.68 on the Toronto Stock Exchange (News - Websites) with 40,000 shares changing hands.
The stock has gained 50 percent of its value since the beginning of the year.
"The share issue was well oversubscribed and some investors want to hold more stock now," said Robert Duncan, analyst at Jennings Capital Inc.
"The acquisition of Mansoor is good deal for them. Mansoor has a better distribution business. They were competitors," he said.
Mansoor markets video surveillance products including CCTV Systems.
Strategic Vista had revenue of C$30 million ($22 million) in its fiscal 2002 with a market capitalization of C$31 million.
($1=$1.34 Canadian)
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The forward P/E is even "more" reasonable. Jennings was calling for $.23/share before this acquisition and equity raise. As Bernie has said this acquisition will be accretive to earnings.
I would think 4Q earnings will come in around $.04/share, give or take a penny. So you're buying this turkey for just 10x most recent quarterly earnings, annualized.
I actually like the stock more here at $1.60 than a few months ago at $1.10. Now they have a realistic expectation of reaching "critical mass" to get a US listing, etc. I would define this as getting up to a market cap of C$50 M.
Remember that there is very little float on this one, so it should move pretty good if we get some more big boys interested in the story.
I don't expect 4Q numbers to come out for at least a coupla months, so if anyone is interested in building a position in this it may pay to just nudge into the buying now and just keep putting bids out there over the next few months.