Gediminas Jasionis
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Selectcore Ltd. (CVE:SCG) (PINK:SLXXF) Share Price Jumps Along with the Sales Increase

by Gediminas Jasionis May 4, 2011
4scg_chart.pngSelectcore Ltd. (CVE:SCG) (PINK:SLXXF) share price spiked up after the company presented its financial results for the year ended 2010.

Shares gained 42.5% on a heavy trading volume of 6.28 million, which was more than 4 times larger than the average 1.47 million. Technically, the price also bounced the support at 19.5 cents and hit a new multi-year high at 29.5 cents during the intraday trading. SCG closed just below this level, thus continuation will depend on the sentiment of traders. 

The announced financial results for 2010 were mixed:

  • Showed record revenues of $103.2 million, 23% increase from the previous year;
  • Net loss for the year increased to $1.1 million compared to $13.5 thousand in 2009;
  • Increased gross margins to 7% for the last quarter of 2010;
  • Successfully expanded business in the field of prepaid financial services and technology licensing;
  • Added 3500 new merchant locations to the retail network;

0selectcore_logo.jpgMarket cap shot above $30 million in reaction to the news. Such a high value could limit further the share price growth as the book value actually decreased to negative $4.7 million during the year. There is no fundamental backbone for the share price rally to rely on. Constant business expansion requires a lot of funds and the company ended 2010 with no cash on hand. The business relies on a credit facility and loans for working capital.

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