MOC

[winner69]

Mortgage Choice - only floated a few months ago

Quite a bit of action last day or so.

Some brokers starting to cover

I see doubling next 6-12 months

[winner69]

Another good day today

Presentation attached to last annual result is a good background to the potential of this outfit

[mark100]

MOC could be an interesting one to watch. It has been heavily sold off in the past 18 months due to commission cuts from the banks and falling mortgage applications etc.

The commission cuts are still impacting profit and have another 12-18 months to be fully reflected in the reported profit so earnings will fall again in FY10 before stabilising.

On the positive side, MOC has around half of its earnings from its trail book and is not subject to credit risk. Also with lower interest rates and the boosted first home owner grant there has been an increase in mortgage applications/approvals in the past few months.

MOC is also debt free and pays out 100% of earnings fully franked. Even after earnings fall again the FF yield will be around 10%.

Also Count Financial has around 15% and may come back with another takeover bid.

Chart maybe forming a bottom? MOC hasn't bounced with the other financials.

[mark100]

MOC seems to be trading well at present based on the update earlier this month and today's AGM. I picked a few up following the update 2 weeks back. Care needed though because the chart still doesn't look real happy

[mark100]

Is this a major turnaround for the company? If you look at the last three years, MOC has flat EPS and declining ROC and ROE (although admittedly both are still good numbers at 28% and 18%). I would also be wary of the impact on the housing market from the mining downturn. WA/Perth is going to crash quite badly as incomes there are slashed and unemployment rises, and the question on everyone's lips is whether a bust in Perth will spread to the other states.

WA is 10% of their business.
MOC don't lend their won money they collect a commission
Banks are increasing commission rates, in reverse to a trend a few years back.
Cash EPS (IFRS EPS is a bullsht number with MOC) was up strongly last year
Their Q1 update bodes well for this year with settlements up strongly

Its a trade for me based on guidance but if it doesn't move up it will be sold based on chart not looking great at this stage

Edit: If you're worried about the housing market short Genworth. Yet it is near record highs!

[mark100]

I see your Genworth, and raise you Tamawood! It actually is at an All Time High. A home builder that is expanding into Melb and Syd at the peak of the housing boom. Go figure.

To Tamawood's credit they have proven to be quite well managed since listing. It's a franchise model and is debt free so not a pure homebuilder in a sense. More a fee earner. But you need your franchisees to be going well to get paid those fees! TWD's very high div payout is also pushing the stock up