Page 25 for anyone that doesn't know. http://nzx-prod-s7fsd7f98s.s3-websit...213/367104.pdf
I think you've quite correctly addressed the elephant in the room that many others have opined about in a concerned way before, including myself and i am not entirely sure that this platform is wearing all the overhead costs it should.
How much more do they throw down this rabbit hole in pursuit of online nirvana and at what annual loss ?
As you correctly point out the business is capable of earning significantly more without this handbrake. The rate of growth in online sales given the heavy investment and given the typhoon strength tailwinds blowing behind online sales continues to concern me.
That said the result in the circumstances that were prevailing for that 6 month period is slightly better than I expected.
I don't think there's any marvelous growth ahead but I think the company can make ~ $85-90m this year and maybe in a normal year in due course $110m even with Nick pursuing his fantasy of online significance.
If he wakes up and smells the coffee one day and abandons his reckless strategy I would see that as the catalyst for a significant rerating of the shares.
I have raised my fair value assessment to $3.00. The way they maintained a very strong cash position given all the challenges they had in the period is quite impressive.
I think they are capable of paying circa 20 cps in annual fully imputed dividends in the medium term which is 27.8 cps gross. On a dividend valuation model putting a 9% required rate of return on that I see it as 27.8 / .09 = $3.09
Disc: I started a very small position as an income share on the open this morning.