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Why the Shine share price sunk today

This morning Shine Corporate Ltd  (ASX:SHJ) reported its half-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding half year.

  • Net profit after tax of $2.2m, compared to $7.8m
  • Net profit excluding impairments $7.2m, down 7.9%
  • Total revenue of $86.4m, compared to $88.2m
  • EBITDAI of $19.6m, up 19%
  • Earnings per share (EPS) of 1.28 cents, compared to 4.52 cents
  • Underlying (pre impairment) EPS of 4.16 cents
  • Dividends per share of 1.25 cents, up 25%
  • Total debt of $50.8m
  • Cash on hand of $13.6m

The Shine share price is down 6% to 63 cents in response to the news and is roughly flat over the past year. Shine like its listed tort law firm rival Slater & Gordon Limited (ASX: SGH) has pursued an acquisitive and organic growth strategy, although it has avoided the major mistakes Slater & Gordon fell into.

The Shine Group is forecasting a stronger second half based on seasonality among other factors, with expectations for a “modest increase” in EBITDA over fiscal 2018.

The firm has a market value of just $103 million after today’s share price falls and on some conventional valuation metrics looks cheap.

However, investors should do their own homework before reaching a conclusion on this business and for full disclosure I’m not a buyer of shares.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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