Companies

The full year result by CBA recently was a good reflection of the level of growth Australia is currently experiencing – low. The banks reported cash NPAT was up just 4% for the full 12 months or $278m to $7.1b. However, if we back out the 15% reduction in loan impairment expenses, $191m, despite the oligopoly the big 4 have in Australia, the best they could manage was growth overall of 1-2% in banking, funds management and insurance. The 15% improvement in credit quality was definitely a surprise in the result given the scores of jobs losses recently. A development we continue to monitor closely.

by Roger Montgomery Posted in Companies, Market Valuation.

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Over the past week more than 100 companies have reported their full year results. These results have begun to flow through Skaffold, resulting in the changes listed below for each company. A membership to Skaffold ensures you are constantly up to date with changes to the quality and valuations of every Australian listed company.

To become a Skaffold member and start taking advantage of market inefficiencies that may transpire during reporting season CLICK HERE

And here’s a list of the elements in Skaffold that change automatically as companies report:

1. Earnings and Dividends, Capital History and Cash Flow Evaluate screens updated with 2012 figures
2. New 2012 Skaffold Score
3. 2012 Intrinsic Value – Actual
4. 2013, 2014 and 2015 Intrinsic Value forecasts
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by Roger Montgomery Posted in Companies, Investing Education, Market Valuation, Skaffold.

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With the recent bid announcement regarding Billabong, Roger Montgomery discusses with Ross Greenwood how clever he believes TPG is, particularly as it relates to the long-term performance of entities they sell.  Listen here.

This discussion was broadcast 25 July 2012 on Radio 2gb.

by Roger Montgomery Posted in Companies, Insightful Insights, Radio.

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Roger provides his Value.able insights into Leighton Holdings (LEI) and National Australia Bank (NAB) to Ticky Fullerton in this edition of ABC1’s “The Business” braodcast 14 August 2012.  Watch here.

by Roger Montgomery Posted in Companies, Financial Services, TV Appearances.

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JB Hi Fi today reported its full year results. Revenue of $3.13b was 6% higher than FY11, but NPAT was down 4.6% to $104.6m. While this was the first decline in JB Hi-Fi NPAT since it listed in 2003, it was slightly better than the market had anticipated and, as I write, the share price is up over 6%.

As value investors, we are more concerned about the long-term than the intra-day outlook, and the question exercising our minds is: to what extent are the current headwinds cyclical vs. structural?

JB Hi-Fi believes that most of what is happening is cyclical, and there is some evidence that can be marshaled to support that view. However, it can also be said that retailers who previously competed locally must now compete with the best in the world. In this context, retailers that must pay Australian prices for rent, staff and utilities have some relatively big hurdles to clear.

Investors should also be aware of two interesting financial developments. Looking at the Profit & Loss statement you will see EPS has risen from 101.76 cents to 105.93 cents.

But the charts of EPS in the remuneration section reveal a very different picture. You see, the P&L includes an abnormal loss of $33 million associated with the Clive Anthony’s ‘restructure’. Take the abnormal loss out and the continuing operations made EPS of $1.247 in 2011 against this year’s $1.059. If it was ok to use $1.247 for the execs in working out their incentives, it should be ok for shareholders to use to compare this year’s P&L!

And for those investors enamoured with cash flows, don’t get too excited by the cash flow from operations jumping to more than $215 million from $105 million last year. You see, there’s been a $100 million blow out in payables. In other words JBH appears to have held off paying its suppliers a little longer.

by Roger Montgomery Posted in Companies, Consumer discretionary.

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Leighton’s half yearly results grabbed headlines when they reported a 66 per cent drop in interim net profit to $114.6 million, at the low end of guidance.

For 24 months, we have been warning investors about the company’s difficulties in collecting receivables in the Middle East and the likely writedowns of the Desal Plant in Victoria and the Brisbane Airport Link. And now a string of results are revealing that these issues are savaging the company’s profits which for the most recent half, were down from $340 million in Leighton’s previous first half, the six months to December 31, 2011.

But the problems may not be over. The early traffic numbers out of Airport Link are much worse than expected – even though the opening of the link has allowed drivers on the road for free – the project may go bust like other toll roads before it. We believe Leighton’s have a deferred equity contribution requirement of $200 million that may still be required to be paid.

In the Middle East, Leighton’s has not been paid for a number of projects and they aren’t small. Imagine building an equestrian centre (see image) and failing to be paid. It would send most companies bust.

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by Roger Montgomery Posted in Companies, Insightful Insights.

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Credit Corp (ASX:CCP) has just reported their FY12 results, announcing a NPAT of $26.6m versus market forecasts and company guidance of $25-28m.

The company increased its 2H12 dividend to 16 cps and most analysts were expecting 15 cps forecast. The 16 cent dividend takes the full year dividend to 29 cents, which is 45% higher on the previous year.  The company has talked down the forthcoming year and cited increasing competition resulting in higher ledger purchases.  Investors need to accept this at face value rather than continuing to assume the company will upgrade again at the next half year (as they have done consistently in the past).  FY13 guidance for NPAT is $27-29m and DPS of 29-32 cps.  Based on an estimated 50% payout and an estimated 22% ROE our valuation is further estimated (estimated being the operative word here) to remain well above the current price.  The comments here are for educational purposes only and not a recommendation.  Be sure to seek and take personal financial advice prior to engaging in any securities transactions.

by Roger Montgomery Posted in Companies, Intrinsic Value, Investing Education, Market Valuation.

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Over the next 20 business days, approximately 1,250 ASX listed companies will be reporting their full year (or interim) results to 30 June, 2012.

Twelve months ago, the consensus forecast for the year to 30 June 2012, was for 20% growth in earnings per share.

Over the past twelve months that number has been progressively downgraded to nil, nought, nothing.

For the year to 30 June 2013, the consensus forecast currently stands at 15% growth in earnings per share.

Insights from the outlook statements will be interesting and it wouldn’t surprise us to see consensus earnings per share growth forecasts for the year to June 2013 to follow the same downtrend as those for the year to June 2012.

At Montgomery, we will be using our proprietary fact-based investment process to analyse the results.

We hope this reporting season will alert us to some new companies which own extraordinary businesses trading at a discount to their estimated intrinsic value.

by Roger Montgomery Posted in Companies, Insightful Insights, Investing Education, Market Valuation.

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Roger Montgomery discusses how the latest data reveals that the mining boom has ended, and he discusses the implications of this on mining stocks with Ticky fullerton on ABc1’s The Business.  Watch here.

This program was broadcast 1 August 2012.

by Roger Montgomery Posted in Companies, Insightful Insights, Manufacturing, Value.able.

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Do Newcrest Mining (NCM), Breville Group (BRG), Commonweath Bank (CBA), Westpac (WBC), Wotif.com (WTF) and CSL (CSL) make Roger’s coveted A1 grade? Watch this edition of Sky Business’ Your Money Your Call broadcast 1 August 2012 to find out, and also learn Roger’s current insights into the Mining Services sector. Watch here

by Roger Montgomery Posted in Companies, Insightful Insights, Intrinsic Value, TV Appearances.

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