Silver Chef SIV

[mark100]

SIV looks good value. Growth has been pretty good since listing and for FY10 EPS of 26c is forecast giving a PE of under 7 and a FF div yield of around 9%. ROE is around 20%

Chart is also starting to look ok. Share liquidity is poor however.

I would like to see SIV re-rate to a PE of around 10 over the next 6 months

I hold a few

[Lizard]

Yes, I also have followed SIV for a while and bought a few earlier this year. Still undecided as to how much I like it, so it's just a small hold.

[mark100]

Earnings upgraded again. EPS of 28c giving a FY10 PE of around 6.6. And its trending up...

[Lizard]

Yes, nice result. Wishing I'd bought a few more now - I think I got mine about $1.42, so looking good today. However, I'm not the best on financials - haven't really studied them enough to be confident about leverage ratios etc.

Anyway, good pick there Mark.

[COLIN]

Was about to push the sell button a week or two ago, but the chart has resumed its upward trend and fresh buying interest seems to have emerged. Its a bit of a tiddler, and the size of my holding is commensurate, but the fundamentals are a healthy bunch.

[mark100]

I sold after it went ex div in the 2.35-2.40 range. Missed the recent bounce back

[Lizard]

I sold my handful on the chart and to use funds elsewhere. With divs, had more than doubled my money, so thought there might be better picks for the next 100%, but will keep it on watch.

[COLIN]

On the rise, again. Price chart seems to follow a stepped formation - my stairway to heaven!

[mark100]

I regard SIV as fully priced at $3 unless they exceed my expectations of earnings growth for next year. I reckon there is a good chance of a capital raising soon after the results come out. They've dropped plenty of hints along the way and the increase in the debt facility probably indicates they'll need some equity as well to keep gearing ratios etc in check. So not a bad idea to hold on to a few to be on the books

[COLIN]

I regard SIV as fully priced at $3 unless they exceed my expectations of earnings growth for next year. I reckon there is a good chance of a capital raising soon after the results come out. They've dropped plenty of hints along the way and the increase in the debt facility probably indicates they'll need some equity as well to keep gearing ratios etc in check. So not a bad idea to hold on to a few to be on the books
Now that they have breached the $3 "barrier" I doubt that it will stop there, having regard to the relative buying strength and the momentum that has built up. Remember, markets tend to over-run. And P/E is just over a very modest 8, based on past results.

[mark100]

Hi Colin, they've forecast EPS for FY10 of 28c so I have the PE running at 10.7 at $3. Although given their momentum maybe they will beat that. I had previously expected them to struggle to beat 30c EPS for FY11 due to extra share dilution plus H1 FY10 had an unusually low tax rate. But your right looks like they will run past $3 but I'm not a buyer above that price unless they have some huge profit forecast for next year

[percy]

Article by Citerion in today's www.theaustralian.com.au "It'shot in the kitchen equipment hire game". Also earlier in the week Lincoln Indicators featured SIV.

[COLIN]

Hi Colin, they've forecast EPS for FY10 of 28c so I have the PE running at 10.7 at $3. Although given their momentum maybe they will beat that. I had previously expected them to struggle to beat 30c EPS for FY11 due to extra share dilution plus H1 FY10 had an unusually low tax rate. But your right looks like they will run past $3 but I'm not a buyer above that price unless they have some huge profit forecast for next year

Profit guidance for FY11 out today, following ASX "speeding ticket". Will it be enough to tempt you, Mark? They've now run well past your $3 ceiling. I'm happy to continue holding.

[mark100]

I bought in on Friday arvo Colin at $3.25 after the Eureka report 'tip'.

The guidance today though I thought was below consensus. WHTM are forecasting NPAT around $7m, RBS - $7.7m and Microequities $8.3m. This compares with SIV's guidance today of say $7m at the top end of the range or 31cps EPS. At $3.60 the FY11 PE is around 11.5 which is neither cheap or expensive. So I took the view that the guidance was dissappointing and below market expectations and sold at $3.59-3.60!

As I mentioned earlier I think the lower tax rate last year inflated expectations for this year. I'm hoping that once the excitement around the Eureka report tip dies down the shares may drift back. I can see why you're happy to hold. I suppose I like to take the profit and then re-evaluate the situation again after the shares drift, guidance changes or the market conditions change. Sometimes it works best doing that, sometimes not!

[COLIN]

A good little jump today.

"The Big Little Train That Could!"

Plenty of would-be buyers and scarcely a seller in sight.

[mark100]

I just picked up some SIV at $3.14, a FY11 forecast PE of around 10x. Looks to be some DRP placement related selling into an illiquid buy side.

[mark100]

Nice result here. Tracking ahead of FY forecasts with EPS up 32% for the half. FY12PE looks like being around 8.5x at current pricing after adjusting for being cum a 9.5c FF div. ROE looking good at 26% annualised.

Main negative is the Balance sheet is staring to get stretched. There is still room under the finance facility to grow rental assets but I wouldn't be surprised to see a capital raising sometime in the next 12 months

[drworm]

TGA might be worth the look. To me it looks better than SIV and FXL from a self-funding perspective. I believe it only cap raised once since listing and that was wholly used for an acquisition.

[mark100]

Yes in my view it was very overpriced at $6 plus from the Montgomery sheep and others jumping in. I have been working on 12x FY13 as an approximate entry. That is still more than I would have once paid for the business but it has become a more widely known stock and lower interest rates have bumped up the PE it can trade on

[mark100]

Piss poor treatment of retail shareholders. As if a $3m SPP wasn't going to be oversubscribed!

[Huang Chung]

It got a plug from Tim Kelley of the Montgomery Fund on Tuesday night's airing of Your Money Your Call.

[NZSilver]

Thanks KW, much appreciated

[percy]

Since the AGM presentation that forecast EPS growth of 10% for FY14 the price has been in decline, touching down today on its 200 day MA (which might make it the second stock this week I need to sell :-(. Will wait to see if it bounces off the 200 day MA, but the lack of buyer interest is a worry as its killing the share price at the moment. Offloading a big parcel of shares without hammering the price down further is going to be difficult.

It is a little expensive (P/E of 16) considering its forecast of 10% eps growth, but not hideously so, and with growth opportunities in new markets such as NZ and Canada, there is a lot of growth still to come. Current dividend yield of 4.2% which is respectable.

I'm crossing my fingers and hoping this one picks up some buyer interest soon. Come on Mark and Percy, help me out :-)

NO WAY.!!!
I have an expensive evening coming up!
It is going to cost me a fortune to keep your wine glass filled on the 28th.!!!

[mark100]

KW, my initial instincts are to avoid after the initial downgrade because they are often followed by further downgrades. I think it was in either the AGM or FY13 result that SIV first alluded to slowing growth and obviously things have deteriorated from there.

My preference at the moment would be for FXL where I have been waiting for a re-entry. It is also under its 200DMA but has re-affirmed its forecast for FY14, made a FY15 EPS accretive acquisition and at $4.20 is trading at 15x cash FY14 EPS. At this stage I would prefer the safety of FXL at 15x after reaffirming its forecast rather than SIV at 13x after downgraded earnings

[noodles]

KW, my initial instincts are to avoid after the initial downgrade because they are often followed by further downgrades. I think it was in either the AGM or FY13 result that SIV first alluded to slowing growth and obviously things have deteriorated from there.

My preference at the moment would be for FXL where I have been waiting for a re-entry. It is also under its 200DMA but has re-affirmed its forecast for FY14, made a FY15 EPS accretive acquisition and at $4.20 is trading at 15x cash FY14 EPS. At this stage I would prefer the safety of FXL at 15x after reaffirming its forecast rather than SIV at 13x after downgraded earnings

It was only 18 months ago, SIV was trading on a pe of 10 and was GROWING earnings. I think we have all become too comfortable with much higher valuations.

[Buffett Jr]

Half yearly results released today.



1H13

1H14

Change



Revenue

$53.6m

$67.4m

+25.9%



Rental assets (at cost)*

$257.4m

$274.5m

+6.6%



NPAT

$5.9m

$6.5m

+9.5%



Underlying NPAT

$5.9m

$5.8m

-1.4%



Net operating cash flows

$36.7m

$40.7m

+10.9%



Basic EPS

21.9cps

22.4cps

+ 2.3%



Dividend (fully franked)

14.0cps

14.0cps

unchanged

[mark100]

I almost bought on the result but it's rare for growth to quickly return back to normal after a disruption. Might wait for the next earnings update...

[Buffett Jr]

You are both looking ahead only to next year. I prefer to look at companies like Silver Chef and see where they are likely to be in 5+ years time.

The expansion into non hospitality (Go Getta) and overseas (Canada and New Zealand) is having a few speed wobbles at present but the long term future of the company is very promosing with these future growth and diversification opportunities. The changes in management recently I think are good for the company providing they find the right person to fill the CEO shoes.

I see you sold recently KW, was this before or after the drop from $8 to $5.

[mark100]

You are both looking ahead only to next year. I prefer to look at companies like Silver Chef and see where they are likely to be in 5+ years time.

The expansion into non hospitality (Go Getta) and overseas (Canada and New Zealand) is having a few speed wobbles at present but the long term future of the company is very promosing with these future growth and diversification opportunities. The changes in management recently I think are good for the company providing they find the right person to fill the CEO shoes.

I see you sold recently KW, was this before or after the drop from $8 to $5.

How long you been investing for? My strategy has worked very nicely for 15 years thanks. I would be happy to compare returns with you over that period.

Buffett buys whole companies and can wait out a slow periods and can influence how the company is run. My guess is you are a portfolio investor like the rest of us. You own a very small stake, have no control and can't access the companies cash flow other than via dividends. Reading all the Buffett books in the world won't change that

[Buffett Jr]

How long you been investing for? My strategy has worked very nicely for 15 years thanks. I would be happy to compare returns with you over that period.

Buffett buys whole companies and can wait out a slow periods and can influence how the company is run. My guess is you are a portfolio investor like the rest of us. You own a very small stake, have no control and can't access the companies cash flow other than via dividends. Reading all the Buffett books in the world won't change that

Hi Mark,

I've been investing for 4-5 years now.

I never said that I own whole companies, I'm just sharing my way of investing.

[noodles]

After. It got me :-(
There are better investment opportunities elsewhere for that time period. If and when it turns itself around, and the share price does likewise, then maybe I'll get back in.
KW, As such a respected poster, I'm always keen to know what you consider the better opportunities are ATM. Please tell:)

[Buffett Jr]

Well I am back in - and just in time as SIV is back in form, hitting a new all time high this week of $8.97. The chart has been a good one to read (ie. easy) - I meant to buy back in at $6.50 in early Feb but fluffed around, and then bang, it gapped up and it was off to the races. Well it did me well last time, so I forgive it for its [not so] brief stint in rehab, so here's hoping for another few years of good times :-)

https://content.markitcdn.com/equityservices/charting/charting/uploadhandler/z04e3110az0cd0458c8fc24b539dd9b19d1579831f.png

I sold out after their latest 6 monthly report when they changed how they measured depreciation on their assets and their head of risk resigned shortly after.

[Buffett Jr]

This one.

Prior to 1 July 2014, the Company depreciated its rental asset base using a range of depreciation rates ranging from one

to five years, based on the assessment of the practical useful life of assets financed under rental contracts. The majority

of the Company’s hospitality assets were depreciated on a five year straight line basis and GoGetta assets were

depreciated on a 4 year straight line basis. After evaluation, including historical asset and contract performance, the

Company has determined that for its long life rental assets:

- an initial depreciation life of three years is the most appropriate period to match the economic cost of the Group’s

asset base against the revenues it derives over the life of its rental contracts; and

- the application of a 35% residual value is more reflective of the value implicit in the Group’s idle asset base which is

awaiting deployment under a secondary rental contract.

After performing more detailed analysis, the Company has determined that the above modifications meet the definition of

a change in estimate under AASB 108 Accounting Policies Changes in Accounting Estimates and Errors. The change in

estimates has had the effect of reducing the depreciation expense for the six months from 1 July 2014 to 31 December

2014 by $0.9 million assuming the 1 July 2014 rental asset base was depreciated for the full six month period without

taking into account the addition of any rental assets acquired during the period

[Buffett Jr]

For example. $100 asset. Using their old 5 year straight line method $20 of depreciation per year.

New way is same $100 asset, residual value of $35 after 3 years so $65 of depreciation over three year period compared to $60 from old way.

This is an increase of 8.33% in depreciation. So if you look at the last profit increases, a lot of it is actually just due to changing how they depreciate the assets. Just added to the argument when their head of risk (who you would assume would be all tied up in this side of the business) resigned a week or so after the announcement. Made me wonder. I don't like to wonder about my investments so sold.

Perhaps the wrong thing to do taking into account that was when the price was still under $8, but who knows.

[Buffett Jr]

I think the thing driving the share price is that they said Canada was cashflow breakeven, and expected to be profitable 1H 16. There was a lot of doubt about whether they could make an offshore expansion work, or if the model would only be successful in Australia.

Do you still own this one KW?

[DarkHorse]

Just having a wee look at this consistent top performer - looking pretty cheap atm (25% below average analyst target price 4traders) with still plenty of growth potential for Go Getta and in Canada. Anyone holding - or decided against?

[NZSilver]

Thanks for bring to my attention, I haven't looked at this in a few years. Will take a look

[DarkHorse]

Cheers. For any unfamiliar with the business this recent little article provides a neat introduction: http://www.monashinvestors.com/silver-chef-march-2016/

[macduffy]

Update from SIV yesterday disappointed the market which marked the SP down 15%. A case of not meeting expectations - doesn't look too shabby to me.

http://www.asx.com.au/asxpdf/20160721/pdf/438q8k01429tgm.pdf

Might be worth a look today.

[Snow Leopard]

Mr Market finally understnding what they were told 5 months ago and hopefully over-reacting.

Best Wishes
Paper Tiger

[Snow Leopard]

For reasons which allude me SIV finished up 4.4% on the day.

It had already made up all of the the drop from the late July announcement so sitting on a 23% gain in less than 3 months.


Best Wishes
Paper Tiger

[Snow Leopard]

For reasons that also allude me, it has given the 4.4% back and is where it was 3 days ago.

The joys of the ASX :D.

Best Wishes
Paper Tiger

[macduffy]

An AFR headline reports a major fraud at SIV. Article is behind the usual paywall.

Shareprice is down 11.5% today.

[Joshuatree]

Just seen this ; missed a golden opp at or below $9(currently $9.73). $3 million fraud.

[Snow Leopard]

Announcement (http://www.stocknessmonster.com/news-item?S=SIV&E=ASX&N=985059) came out yesterday end of day.

FY NPAT expected to be down maybe 10 percent this year. But hopefully a one-off and really only worth 2-3% off a current valuation.

Those I own before now worth less :(. But had some fun today :)

Best Wishes
Paper Tiger

[macduffy]

Thanks, Tiger. Yet again I forget to consult the obvious source of news - official announcements!

:ohmy:

Yes, Jt, a fleeting opportunity missed there. SIV is one of those stocks that I wish I'd bought a few years ago.

[Snow Leopard]

Half year is out (http://www.stocknessmonster.com/news-item?S=SIV&E=ASX&N=999286) and I sense a possible bargain in the offing.

As a result of the before mentioned fraud event then the headline is:

an EPS of12.85cps as opposed to last years 32.54cps and
a reduced interim dividend of 12.9cps down from 17.0cps.

Full year is expected to be in the 58.9 to 64.5cps range (down from 68.9cps).

Looking past the failings of this year and you are talking of a no growth scenario going forward of 78.6cps+ next year.
Add even modest growth and what is you valuation compared to the share price?

One of the things that baffles me with this share is that repeatedly the results come out as already flagged by the company and the market is really surprised!

Anyway we will see how low the market is willing to go and maybe go shopping.

Best Wishes
Paper Tiger

[DarkHorse]

Hi PT
I was very interested a while ago - on the surface they have a great track record and look cheap.
However, if you dig deeper their earnings are not so solid - see for example http://findthemoat.com/2016/12/01/silver-chef/

[Snow Leopard]

Hi PT
I was very interested a while ago - on the surface they have a great track record and look cheap.
However, if you dig deeper their earnings are not so solid - see for example http://findthemoat.com/2016/12/01/silver-chef/

Well I hope you treat these sort of articles with as much caution as you do my posts


...Looking past the failings of this year and you are talking of a no growth scenario going forward of 78.6cps+ next year...

That should have been 68.6cps. A slip of the finger, sorry, I should have noticed :(.

But you will note that I suggested a no growth start, even if I did get the number wrong.
And then hinted that even a modest growth based valuation would offer upside.

So anyway, I believe under the above criteria it has a value of $8.10 now and $8.78 in a year.


I did stick a sub $7 bid in today, which obviously never got hit :mellow:.

Best Wishes
Paper Tiger

[Snow Leopard]

Well there is never a dull moment with this one is there?

UP 8.8% to $8.43 at close today on good volume:

That puts be back in profit overall and with a 20+% (unrealised) gain on my 3-Mar buy.

I will enjoy the moment. :mellow:

Best Wishes
Paper Tiger

[Snow Leopard]

and today we have a trading halt for the announcement of

{drum-roll}

an 'Accelerated Non-Renounceable Entitlement Offer'

I can have 1 new one at $7 flat to go with every 12 old ones.

What they actually mean by 'Accelerated' beats me given that you do get your newbies till 24th April.

Currently in a halt at $7.77 having gone $0.10 ex-div last week (and for some reason they have suspended their DRP ?).

Best Wishes
Paper Tiger

Disc: currently watching (apart from the actual surgery scenes) Medical Top Team (https://en.wikipedia.org/wiki/Medical_Top_Team):

https://0.viki.io/c/12710c/d6c4a303c9.jpg?x=b&s=380x214&q=h&e=t&f=t&cb=1

[Snow Leopard]

Seems that my best investment strategy is to sit on a beach for weeks watching the hermit crabs go by while my buy at the bottom investments come up with the tide.

Best Wishes
Paper Tiger

[winner69]

Exciting day today for Silver Chef Shareholders

[percy]

I am very excited I never brought any.

[Snow Leopard]

I bought some, and then more some and sold all for a small profit towards the end of 2017.
Pretty sure the price was $7 something then
Horrified to see it at 70c, less than two years later.

Dodged the silver bullet there!

[freddagg]

I bought some, and then more some and sold all for a small profit towards the end of 2017.
Pretty sure the price was $7 something then
Horrified to see it at 70c, less than two years later.

Dodged the silver bullet there!

A regular bullet will kill a Snow Leopard no trouble

[Snow Leopard]

A regular bullet will kill a Snow Leopard no trouble

I feel I should take umbrage at that remark.

If you would be so kind as to provide your address I will get the local cats to piss on your flower beds.

[Hectorplains]

I bought some, and then more some and sold all for a small profit towards the end of 2017.
Pretty sure the price was $7 something then
Horrified to see it at 70c, less than two years later.

Dodged the silver bullet there!

They have the distinction of featuring in the ASX top ten for capital destruction in the last year.