Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.
What: On Monday 9 January 2012, Boom Logistics Limited (ASX: BOL) soared close to 20 per cent higher after the company responded to an ASX share price query.
So What: The ASX noted a change in the price of the company’s securities from 22.5 cents on 30 December 2011 to 19 cents, on larger than normal trading volumes.
Boom responded to the Exchange’s questions by reiterating its guidance to the market in respect to its outlook for FY 2012, namely EBIT of $35 to $40 million and forecast net tangible assets per share of $0.53.
Now What: Boom looks an interesting turnaround prospect. Management have taken some tough decisions in lowering their fixed cost base through business exits and restructure.
The results are already showing up, with an improved first quarter result in FY12. Boom now calls itself a focused crane logistics and travel tower business, concentrating on the resources, energy, utilities and infrastructure sectors.
Boom shares have now roared to back up to 25 cents, a level they traded at just over a month ago.
Benjamin Graham-type investors might be attached to the 50 per cent discount to net tangible assets. Deep-value investors might be attracted to price to EBIT ratio of a little over 3. Boom’s not the highest quality company going round, but active investors might want to take a closer look.
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