FRR 0.00% 3.1¢ frr corporation limited

is frigrite starting to thaw

  1. 9 Posts.
    Frigrite has posted several disappointing years and has deservedly been hammered in the market The time has come to revisit the company and investigate its new potential.

    I believe it is about to turn its fortunes around.

    FRR has three ( I would say four division) Manufacturing, Refrigeration -installation & service, Air conditioning and all are ready for a return to positive profit & cash flows.

    Manufacturing has undergone a revamp and cost reduction program, including the redundancy of 35 employees. A firming of the order book with $16m of orders in hand + $16 m WIP at the end of July.

    Refrigeration Installation expects to have a +10% increase in the first half of FY09, this would be due in part to the flow on effect of Manufacturing.

    Refrigeration Service – a change from the Coles comprehensive service contract to a 'do and charge' basis should help to restore margins and the picking up of another major supermarket contract (that I am disappointed it wasn't announced to the asx) which started in October.

    Air conditioning now accounts for 17% of revenue. This spreads the customer base and if the growth rates in air conditioning can be maintained may become the 'jewel in the crown' (if margins can be maintained).

    A new chief Financial Officer was appointed in March 2008 and has written off everything that he could – this should give a lower base to start from.

    Queensland operations have ben cleaned up and have “shown an encouraging return to profitability in the opening weeks of FY09”.

    With these things combined I can see no reason why a return to FY2007 pretax profitability levels of $3.5m can not be achieved. Even allowing for a reduction from those levels of 30-40% to allow for current tight margins, this leave a profit of $2m+ or 3.7c per share x sector PE ratio of 6.5 gives a share price of 24c

    I believe that for FRR the worst is now over. Management will announce their current operational position at the AGM on 26/11/2008 and this should create support for FRR above the 20c mark.

    I am happy to continue to accumulate up to 13.5 – 14.0 cents over the next few weeks.

    I would welcome comments, but please be gentle as I (and my rose colored glasses) are new at this.
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