Originally Posted by
Beagle
UBS - Excellent research. Obvious to me they invested substantial time and resources and engaged at significant length with senior OCA management in compiling that 45 page report that came out in December.
Underlying NPAT as forecasted by them - FY20 Actual $43m, FY21 $48m, FY22 $64m, FY23 $76m, FY24 $93m, FY25 $110m, FY26 $126m.
Average daily turnover as reported by them suggests the entire stock of the company is churned every two years.
The real money with this one will be made by those who share the long term vision of the company's management and directors.
I am comfortable with their forecast and note for the ten months to 31 March 2021 that equates to approx 9.25 cps annualized from 7 cps last year, growing to FY22 10.3 cps, FY23 12.2 cps, FY24 14.9 cps, FY25 17.7 cps and 20.22 cps in FY26, (will be a little less with shares issued in lieu of dividend in the years ahead)
Regarding this year, if they make $48m underlying for the ten months, that's $4.8m per month so on a straight arithmetic basis that suggests 6 x 4.8m = $28.8m for the result later this week but I am aware that the August shutdown in Auckland cost them momentum with resale refurbishment and I think there has been some PPE costs in the half year to 30 November that are over and above the ordinary.
My initial thinking was $25-30m for the half to be announced but on further consideration over the holidays I am more comfortable right at the bottom of that range. My view is significantly different to Mav's which goes to show that whilst we sometimes confer and very much enjoy doing so, we often see things quite differently. That said I will be exceptionally pleased if the underlying profit is in the ballpark he suggested and anything over $30m would have me anxiously wanting more shares as quickly as possible so I really hope my good friend is right !
I am comfortable one year hence from here at 18 times forward earnings = 18 x 10.3 cps = $1.85 updated target price early 2022. Over time as they prove their growth rate I expect that multiple will expand to about 20 times as they prove over a number of years they can grow eps at a CAGR of something like 15%. We could see eps of 20 cps in FY26 and the market pricing the company on a forward basis in late 2025 at 20 times that number = ~ $4.
As I said earlier, the real money will be made by those with the patience to hold this for at least 5 years which is what I intend to do.