I'm on record for months now as calling the SP as being too high and have been absolutely spot on. Notwithstanding that its anyone's guess when and if there might be a dairy recovery the current price around 112/113 feels like fair value to me. That is not to say it won't fall further, (it may well do exactly that with all the momentum with other banks world-wide) so I am a patient buyer provided their provisioning looks reasonable.
Based on a long term average PE of about 11, (this multiple I have chosen has come back a bit in line with other bank stocks region wide) and forward earnings of about 11 cps fair value in my opinion is about $1.21, (less provisioning for bad and doubtful debts that hasn't already been done to mark to their true market value).
To me it seems that Mr Market is saying that based on 473m shares at 112 there's really about .09 x 473m = $42m of irrecoverable loans somewhere on their balance sheet and given the dairy loan exposure of just over $200m this seems consistent with the nightmare scenario that's playing out in ultra slow motion before our very eyes that many dairy farmers will face receivership over the next few years.
So there you have it. I'm now neutral on the stock with a bias towards buying if there's further falls and provisioning looks reasonable. Pleased I sold at $1.31 just under one year ago but looking to be well positioned somewhere around the 52 week low of $1.06.