Will ALF pay a dividend this financial year?
Is this a crazy question?
The difficulty in researching ALF is because over the last few years the real story on market cap, earnings ability, dividends, PE ratios etc etc has been totally warped by (a) their predicament and resulting loss reporting and (b) the concurrent massive amount of share issues/consolidations that took place over the period.
I have looked at it from various angles and have had trouble coming up with any numbers I can have any confidence in, so I decided to analyse ALF all the way from 2001 till the first signs they were falling off the rails (by buying sawmills etc) and finally got some pretty consistent results.
I will spare the detail for now and don't want to go too far into any assumptions made in arriving at the following (you can read my previous posts for some of that)...
Firstly, a million shares in ALF right now equates to 1.1% of the company.
To buy 1.1% of ALF over the last year or so would have cost an investor between NZ$20,000 to NZ$30,000.
In the years leading up to ALF's train wreck, the same 1.1% would have cost well in excess of NZ$20 million to buy.
In other words the market currently values ALF at around 1/1000 of what it used to.
Some things have changed now for ALF since their crash, some of which makes their future fundamentals and ability to earn more uncertain. But if ALF survives (and I most certainly think they will) then the chance exists for them to rise like the phoenix from the ashes.
What if, after all the dust has finally settled, they have only 1/10 of their historical earning capacity? That would make 1.1% of ALF worth NZ$2 million. Even if it takes them 13 years to get there, that would still represent a capital gain of 40% per annum compounding from a purchase price of NZ$25k. Dividends would be the cherry on top.
Using historical data and taking a pessimistic approach I broadly calculate that ALF's share price should be 11 cents for every $1million in equity it has.
I think there is a real possibility that ALF will have NZ$1M in equity by the end of this financial year. They might even have it now.
If ALF eventually get say $10M back from Watson/Hotchins if that is possible, then there's a nice bonus.
I would enjoy some devils advocate / independent calcs / different views etc feedback from those who read this.
After my previous posts on ALF, I'm not expecting much though.
Vaygor1.