???
??? hmmmm...OK.. Answer ..probably for the same reason that investors want to buy FBU shares for 1161 cents when the NTA/s is 334cents
Hey guys, DPC at these levels you are getting over 10% div! In the half yr announcement the board confirms Full yr profit of $6 m, so div should be around 8-9 cps.
Also interesting to see one of the directors slowly accummulation more shares on the market. :)
disc: Shareholder
A net profit after tax of $6 million would be earnings of 16.5c per share, so a 9c dividend would be a relatively modest payout ratio of 55%. So it's possible that they could pitch the dividend even higher than that.
Assuming a 9c dividend, they would be yielding 10.8% net, or over 15% gross at their current price of 83c.
Something similar applies to Dominion Finance. They have said that they expect their profit for this year to be 10% - 15% ahead of last year. Taking the more conservative figure I make that earnings of around 28.5c per share. The consensus forecast for their dividend is around 13.8c - again a modest payout ratio slightly below 50%.
A 13.8c dividend would put them on a net yield of 10.9% (again over 15% gross yield) at their current price of $1.26.
It hardly needs saying - both companies are currently priced with a built-in fear that something nasty is going to happen ... but just how nasty will it really be?
As I have said previous posts, the consolidation in the finance industry will benefit those that are still around. There will always be a need for finance companies to fill in the role banks cannot fill.
DPC has a NTA of around $2.00 and the backing of the large shareholders. I also like their business model. There maybe some short term weakness, but the long term future looks bright.
DPC still has the highly complex, yet profitable insurance business unit.
Am wondering if they will sell that, or look to expand it as part of the turn around process.
I've always liked the DPC model (Brent King is hellbent on it!) & see DPC as one of the few small finance companies to make it through the otherside & prosper again.
If/When this happens is the main question!
Good doctor come back to earth please -
The company's profit guidance - do you know how much of this was ongoing operating profits versus one-off gains on asset sales or asset revaluations etc? It will be a large % and probably most will come from selling the building - wonder what the NTA is now?
They have required a cash injection from major shareholders to stay afloat - Would they need this if they were generating CASH (not accounting profits?)
The dividend is high but most goes back to the shareholders who lent DPC the money (get it money go round designed to support the share price)
why assume they are selling non-core businesses - very irrational - What are thier core businesses? They seem to change every year? What business lines can they "create value" in " - please tell me as then I would be far more knowledgeable than the rest of the market
When did you read "that in this environment you can buy cheap assets" - You quoted an NTA of $2.00 when the share price was well over $1. I was flabbergasted that no other larger finance company did not grab such a bargain!
VIK is killing the share price - have you checked how many they have left to sell? On the 14th Dec 07 they had a trifling 1,797,059. When that stake clears this stock will get re-rated.
Hugh Green has LENT $20 million to keep a very large investment afloat
Have I mentioned this is the worst performing sector with the worst outlook due to a global credit crunch, indebted consumers, aversion to finance company debentures
The worm will turn when the thunderstorm has gone away - I am huddling in the shelter for now!
well said dsurf.
its all about the quality of the future earnings
Rights issue is SLPF. St Lawrence owning about 1/3 will be putting in 10 million or so and with NTA $1.50 for 75 c they probably don't mind more. SLPF appears to have some good investments generating cash but they want more to invest without lending off the bank. They have a few debenture holders to repay & no sign of new debentures so by the end of a year will be a listed company on NZX, in fact looks like will be in the next month so they won't be on unlisted I guess. Will 100 million put them in the top 50?
Strategics recent good result show what a good finance company can do!
P2R How much of the profit is capialized interest? Why are they still chasing previous investors 12 months after they withdrew all their funds? And why such a big expensive advertising campaign at the moment?
I'm not sureabout cap interest.
I presume you are talking about St Laurence ads. They are promoting debentures and are only noticable because they did so little before. Thats what finance companies do. They seem to rely on 300 odd brokers mainly. Surely the proof of the pudding is in the eating.
SLPF has not done any promotion.
I am not sure if i agree with you entirely. Yes Green is Smart. What finance companies dont disclose until its too late its bad debts. Thats why many have fallen over without much notice.
The co has a market cap of just under $30m and Green pumped in $10m plus the other co? seems awfully like they have a cashflow issue rather than using it as expansion. S lets see what they have expanded lter this year.
Come June or before lets see if HG extends their loan, pull out their money or just let the full term (6 months expire). If they pull out within the next 3 months then DPC are on skid row. If they extend beyond June then DPC are still in a bad way with their Cash Flow. If they let it simply run the ull 6 months then that would be the best sign for shareholders.
Why has HG and the other co invest $20m? Well HG has a 20% stake in DPC but if he feels that his loan is in jepordy the he will pull the plug and make sure he gets back his $10m and accept a hit with the other shareholders. He may end up buying it out himself.
Watch this space..
P2R Iam talking about your favourite finance compay Strategic Finance With their adds & correspondence and I was asking you how much capitalized interest was in that large profit you were talking about. Did you also see the piece in the papers about the hole in the ground they are financing.