Their last interim has a deferred tax asset of $3.3mill. Where does the 20m come from?
Just as a matter of interest, but have you guys actually figured out the number of shares out there, on a diluted basis. The figure I am seeing is 480million, which seems like an awful lot, if you'll pardon the expression. I have a small holding in DPC, and am generally positive about its outlook.
Anyone see tv3 news tonight? Alex Hayde from ASB securities announced "DPC has today announced a new acquisition of Turners Auctions". WTF??
Visions of Anchor Man following the auto cue. Is this guy an employee or just a stooge for the camera.
What a joke. A plague on both their houses.
I think the off-balance sheet tax losses are still there after the capital raising and option take up.
See attached youtube preso at the 4 min mark
http://www.youtube.com/watch?v=P5Aqh...6FhnvLXUz1ZZsS
It was recently suggested to me that what with the latest announcement from DPC I should take a look at them.
Firstly I have to say that I do not currently hold nor have any intention of buying into DPC because the average daily turnover of shares as I measure it (using a 64 day period) is too low. I do not like to get into anything I can not get out of
Having said that over the last three weeks turnover has on average been sufficiently high that if maintained the red flag would be swapped for an orange one and then I could reconsider a minimal holding.
Along with the recent increased volume above there has also been an increase in price which is a good sign.
So anyway a few numbers & assumptions
They have had a fun few years!
Profits = real money.
Shares on issue: 494M
FY2014 profit: $4M331
FY2015 profit: $10M500
FY2016 profit: $14M500
as per forecasts with basically no tax paid as past losses are used up. This is the most optimistic scenario tax wise. (this period is good for acquiring other stuff)
From then on tax paid on profits and 6% pa growth (so start paying a dividend with imputation credits attached)
FY2017 profit: $11M066 and so on.
So:
Value at 31-Mar-2014: $0.225
Value at 31-Mar-2015: $0.237
Obviously my values are less than current market price - I would say that the expected profit boost from having tax losses to use against profits for the next few years as had an effect.
Someone remind me to re-visit this once the FY2014 financial statements are released (in May).
Usual disclaimer: happy for anybody to come up with a different result.
Best Wishes
Paper Tiger
Hi there Paper Tiger,
I have been somewhat skeptical and scathing of this company in the past but with their latest acquisition on a very good PE, I am coming around to having a look and dipping my toe in the water. It seems that Paul Byrnes et al are doing exactly as they stated they would do and adding shareholder wealth. THere are a lot of shares on issue and existing shareholders have been diluted but now it seems this has been countered by a huge explosion in profits or projected profits.
I would like to know what metrics you use for your valuation of the company. Ie what discounting factor you use and I disagree slightly with your 6% growth p.a following 2016 as I believe merger and acquisition activity and general organic growth will be greater than this. So I think at 25 cents that this company may be a good prospect. Acquiring.
Hi PT,
The tax losses are somewhere between 17-20million. Most of these are off balance sheet. I don't know why they are off balance sheet. In a recent presentation, Paul Bryners, reiterated that these losses still existed and would be utilised. http://www.youtube.com/watch?v=P5Aqh...6FhnvLXUz1ZZsS
So I don't think they will be utilised by 2017. EDIT: This is wrong. See PT comment below
p.6,7 of the AGM make interesting reading
http://www.dorchester.co.nz/Modules/...DocumentId=159
It targets NPBT of $20mill. This assumes 2 new business streams, organic growth, and acquisitions. They indicate that they can reach this target using current equity plus the issue of 100mill shares. Obviously there is a lot of execution risk in reaching these targets. At least they have a vision and a target. A lot of companies these days are focused on cutting costs. DPC are focused on building scale in their business.
If this target can be reached, it would significant increase your valuation as FY2017 NPAT would exceed $14.4mill. I actually think it will be higher as there will still be tax credits.
I really value your analysis on this because it highlights that the current share price does not excessively exceed what I consider your conservative valuation.
Thanks for performing some analysis.
noodles