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Companies
TSV Holdings: a share price recovery could occur
Trevor Hoey, 22nd June 2007
There has been some recent interest in TSV Holdings, a company that fell from grace earlier this year following an earnings downgrade. Since the January downgrade there have been some interesting developments, with funds jumping in and out of the stock, management changes and a third quarter cashflow report that could be considered a cause for further caution.
In response to some queries from readers and to put things into perspective we provide the following information and commentary.
Following TSV’s acquisition of Austco there was a sense of anticipation that management from that company would take up board positions, strengthening TSV’s ability to execute efficiently. Discussions with fund managers suggest that they are happy with the underlying business and view the Austco acquisition as a good fit.
Warakirri’s renewed interest in the company came after the appointment of Robert Gray, Austco’s founder and CEO, as the new managing director. As suggested by the timing of Warakirri’s move, the change in management was a key issue.
As TSV’s 2007-08 outlook becomes clearer, a share price recovery could occur. TSV’s depressed share price makes it a prime target for tax loss selling – this may account for recent weakness, so the new fiscal year could mark the start of a turnaround.
From a longer term perspective, the new management team has to deliver. The release of the company’s 2006-07 result, in particular comments regarding the 2007-08 outlook, should be key share price drivers. This will be more important than the March quarter cashflow report where timing differences were the main reason for short-term negatives.
Whatever your views, you can discuss this article - or any of Trevor's articles - on our message board Your 2 Cents.
Trevor Hoey is one of Australia's leading finance journalists, having written for Shares, Personal Investor and BRW magazines. Trevor's broad contact base enables him to find out - and report on - the real story behind what's happening at Australian listed companies. Trevor writes for the Australian Financial Review and AFR Smart Investor magazine.
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