One Legged Update on Reporting Season

1 August 2013

Reporting season kick-off.

GUD- under pressure, failing to invest in tiring brands, dividend is too high, debt is mounting. Dropped from superstar status after 10 years of stirling results.

UBI- burning through $6.7m in cash last 6 months, with $18m in the bank and some minor liabilities.

TCL- new CEO with lower pay, and 198% rise in profits due to toll rises. Flagged increasing dividends.

2 August 2013

AMA paid off all debt with $10.8m, and negotiated a new $6m facility. Given that balance on Dec 12 is close to $13m, looks like it is a good deal (assuming they made no repayments in the 2^nd half). AMA’s cash position should be about $8m to $10m.

HSN upgraded profit due to currency movements.

6 August 2013

UOS update- HY PBT is $110m.  The good keeps giving. See here.

7 August 2013

Rumours of tie-in between MND and SSM in the AFR.  Not denied by SSM after ASX please explain.

8 August 2013

ASW- flat results, not much growth, as expected- spinning back cash, good ROE at 20%. 

9 August 2013

Thorney Holdings increased stake in SSM.

12 August 2013

COF FY results out today. As expected, International Developments propped up the whole group. ID EBITDA running at $18m per year.  The whole group’s FCF is about $11m after deducting $10m in restructuring payments. Trading at 5 times EV.

WTF- heavily shorted- 10% shorted as of 8 August 2013.

NWH- CFO resigned without resign. Aftermarket announcement, not looking good.

AMM- results out, pretty impressive.  Good indication for VOC results.

REA- another blistering result.  Pity about the price

14 August 2013

CRZ- good results, $90m cashflow. Priced at $2.4b implies growth rate of 15% per annum for 10 years.

CSL- results as expected. R & D over US$450m pa now, and cashflow still strong at $1.3b.

CBA- results reaffirmed position as the highest quality bank.

UGL and WOR providing better outlook in mining services space.

15 August 2013

IRI results flat.  Cannot understand the price.

SRX results out. Operating cashflow of $24m but capitalised $12m in R & D. Market cap of over $720m implies 20% pa compounded growth for 10 years.  Very optimistic price.

16 August 2013

ONT results out. Slightly better than expected.  Fair valuation at $4 compared to $6.50 SP.  Management is top class, reports are easy to read, and commentary is clear and relevant with very little corporate geekspeak.  Very rare management quality. 

19 August 2013

Question of the day: why do you rationally believe that you have an edge to beat the market?

20 August 2013

EAX results out. Top line showing good growth. But decision to capitalise $1.2m of commissions is questionable.  Expensing these payments would have resulted in NPAT being down yoy.

21 August 2013

SGH- another acquisition. WIP is now $300m, ROE slightly up to 16%.  Disaster waiting to happen.

SEK- FY results with significant gains.  FCF now $160m and current pricing implies growth of 10% per year for next ten years.  Reasonable pricing amongst all these network effect plays.

BYL- record FY results. Flagged no growth for 2014. Mentioned large infrastructure spend for WA. Bodes well for NWH.

FAN- continues to deteriorate. ROE is 13% and no longer a superstar.

COF- director picked up 500k shares. Serious money.

22 August 2013

NWH results out.  Evidence of margin compression, and affected by mining downturn. Management has countered by cutting headcount by 50% (showing in the cashflow) and diversifying into other sectors such as oil and gas where they just completed their first project.  Outlook is good, with 60% of $1.2b of work already secured, and over $3b of works in tender. Debt has gone up slightly, and cashflow has crunched in the second half, even though overall cashflow is still healthy.  At this stage, NWH is unlikely to suffer solvency problems, and is holding up well in difficult conditions.  However, it is priced as if it will be going out of business soon.  Current multiples of below 5 allows 50% drop in cashflow and NPAT.

CDA results out.  Downgrade to short term earnings outlook.

PEA results out.  Lots of contract terminations and variations.  This puts question mark over reliability of cashflows, which is required to balance out mediocre return on capex spend.

IMF results out.  $35m of receivables subject to appeal.  Not exactly conservative accounting.

CMI results out.  Debt free. Declared dividend. $10m operating cashflow, $8m FCF.  TJM continues to lose money, but revenue is up.  NPAT of $10m.  Trading at PE 5 and 5x Operating Cashflow.

23 August 2013

FFI results out.  The food operation has improved PBT to $3m, but food business also incurred $1.5m in capex.  Cashflow healthy, dividend declared.