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I have given Sky Network Television [SKT.NZ] a very wide birth over the years, I have never really understood a company that spent more than 10 years losing money and has only been making it for the last 3 or 4.
I guess they were building up a business?
I don't like its business model; a company that relies on continuous large amounts of capital to keep competition at bay doesn't make for a good long term return.
Sky is also at the mercy of Government regulation, currency fluctuation, product quality and large capital depreciation.
What I do like though (I am such a negative bugger) is that it is a virtual monopoly-in Pay TV terms -but even that is under threat by new technology (which SKY is trying to take a punt on) via the Internet and satellite TV and product.
It hasn't done well over the last year, with a more than 16% drop in profit to just over $NZ42 million in the half year to 31 Dec 2008 on higher revenue of nearly $350 million. This is due to higher capital costs, which I outlined above.
Why the hell then do I mention the company today if I see little redeeming about it in its day to day operations?
I kinda like its share price.
The shares are well off their low of $3.15 during the last 52 weeks but the corollary to that is that they are off their 52 week high of $5.10 and well off their all-time high of $6.75 in late 2006 (see 5 year chart above)
I reckon this company is worth a good short-term to medium term punt.
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Ah but what is your definition of short to medium term?
ReplyDeleteShort term: six months, one month, one week?
On a short term basis I would be waiting for a pullback in SKT :-)
Gidday from Bangkok SB!
ReplyDeleteMy short term is longer than yours.
I reckon 6 months to 2 years
What are you doing in Thailand?
ReplyDeleteDo not forget to drop by and visit Marc Faber, you might end up changing your definition of "short term".
Directions to Marc's house:
A gigantic Indian red building with golden trimmings tucked away in a quiet soi off the Chiang Mai - Lamphun Road, near the Chiengmai Gymkhana Club. Next to the office, is an old teak house where Dr. Faber and his beautiful wife Supatra, from Nonthaburi, live.
http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=5200
http://3.bp.blogspot.com/_Cp2XFV4Xt0s/RsvoZqhXXOI/AAAAAAAAAIQ/ec8cvl9-HN0/s400/Marc%2BFaber.jpg
Cheers, SB, If I have time I will look him up.
ReplyDeleteLet you know what I am doing when I get back in two weeks.
Business looks HOT here. As usual the place is pumping...