January 10, 2013
The following report has been contributed by Harley Grosser – a private investor. Harley has identified a small company he would like to share his findings and personal beliefs about called Paragon Care Ltd which is aiming to take advantage of the growing aged care industry. Paragon is a distributor and manufacturer of medical equipment, and has attractive prospects if it can continue securing major contracts with hospitals. Investing in small companies that have high growth potential but are yet to produce sustainable earnings is risky, but they can be rewarding for people with the right risk profile and investment horizon. Do not purchase or sell any securities without first seeking and taking personal professional advice.
by Harley Grosser Posted in Companies, Insightful Insights, Intrinsic Value.
January 4, 2013
Back in August 2012 when CCP’s share price was falling, following what we considered to be conservative guidance for the full year, internally we prepared the following table:
by Russell Muldoon Posted in Companies, Insightful Insights.
December 24, 2012
JB Hi Fi (ASX:JBH) is a retailer we have followed closely over the years. What attracted us to the business was a focused and well-executed business model that delivered strong returns on equity, coupled with a store roll-out program that allowed those returns to be realized on an expanding pool of assets. Over time, this led to increasing market share and growing EPS. In fact, between 2004 and 2010 EPS grew at a rate of over 30% p.a. compound.
by Tim Kelley Posted in Companies, Insightful Insights, Value.able.
December 20, 2012
We are delighted by the trading update provided late Wednesday night by Silver Chef’s (ASX: SIV) – a business I mentioned just last week on the Sky Business Channel as a ‘Stock to Watch’. It is also one we own in the both The Montgomery Fund and The Montgomery [Private] Fund.
Management have forecast strong EPS growth of 12.7% to 18.3% for the first half. This would be an excellent achievement in what many have dubbed a tough retailing environment. Clearly not everyone in the retail sector deserve to be tarred with the same brush.
Our expectations are for the business to report earnings at the top-end of this range given the underlying momentum and demand for their product suite.
Silver Chef provides lease financing to hospitality businesses under the Silver Chef brand and more recently, for commercial businesses under its GoGetta brand and excellent risk management processes appear to be in place. Both brands enjoy a growing a reputation as industry-leading financing product providers. In particular Rent-Try-Buy and Rent-Grow-Own put less stress on a businesses cash flow in their start-up phases, a large reason for their take-up.
Management have indicated to us that they believe their potential market is equivalent to about $250m in revenue per annum. At the full year 2012, SIV reported $85m in revenue. With the potential to expand by a factor of 3x from here, we are long-term holders and anticipate many more positive future updates. Keep watching this space.
A word of caution. We have a large holding across our two well-diversified funds in Silver Chef and as shown, the share price has performed spectacularly well recently. Please therefore seek professional advice and understand the risks.
by Russell Muldoon Posted in Companies, Insightful Insights, Market Valuation, Value.able.
December 14, 2012
Yesterday, Webjet announced the acquisition of Zuji for US$25m, or 4.6X estimated EBITDA of $5.4m, from Sabre Holdings.
Zuji adds $300m of Total Transaction Value (TTV) and expands Webjet’s footprint in the fast growing Asian travel market. For context, Webjet’s TTV for the year to June 2012 was $768m, up 30% year on year.
by David Buckland Posted in Companies, Insightful Insights, Tourism.
December 10, 2012
Few Australian management teams and their boards have been successful over long periods of time in ‘rolling’ up businesses under one roof. Inevitably, too much is paid; they struggle to deploy systems to drive scale and efficiencies; and retaining key management becomes a key problem once their lock-in period expires. It’s why we are so cautious of business strategies that revolve largely around acquisitions to grow the business. While it is easy to ‘grow’ by simply purchasing another business’ earnings, unless the return on the equity employed remains stable or improves, such capital allocation decisions will erode shareholder wealth over time.
by Ben MacNevin Posted in Companies, Insightful Insights, Insurance.
December 7, 2012
With Christmas trading moving into full swing, everyone’s focus seems to be on the retail climate in Australia, with particular themes in the media springing to mind:
· Online sales are making it difficult for bricks and mortar stores
· Interest rates need to be cut further to stimulate spending
· The failure of Click Frenzy…
by Ben MacNevin Posted in Companies, Consumer discretionary, Investing Education.
December 1, 2012
Expansion success hinges on global economies
Two analysts, presented with the same set of facts can, and often do, arrive at entirely different conclusions. Indeed, every day and every time a stock trades, the buyer and seller are arriving at vastly different conclusions.
On the one hand a renewed interest in cyclical stocks does not make it difficult to imagine Servcorp shares racing higher – the company having boldly positioned itself for an economic upturn by doubling its floor portfolio and expanding in the United States in anticipation of a strengthening global economy.
by Roger Montgomery Posted in Companies, Whitepapers.
November 30, 2012
On Wednesday the Australian Bureau of Resources and Energy Economics said 51 mineral projects, 18 gas and petroleum projects and 18 infrastructure projects worth $268 billion had been approved. Of the 87 projects, 11 mega projects worth more than $5 billion each, account for an aggregate $200 billion or 75 per cent of the total committed project value. For some months now we have been warning investors of a growth cliff and note the slowing in the number of projects that have progressed from potential to committed. For example, in the six months to April 2012, 21 projects worth $45 billion were approved. However, in the six months to October 2012, 10 projects worth $13 billion were approved.
by David Buckland Posted in Companies, Energy / Resources.
November 26, 2012
Roger provides his insights into the current lack of value in the Australian market with Ross Greenwood on his 2GB radio show. Listen here.
This program was broadcast 26 November 2012.
by Roger Montgomery Posted in Companies, Intrinsic Value, Investing Education, Radio.