Originally Posted by
Scrunch
My thoughts,
Fantastic that profitability guidance has been hit (and at the top end)
Marginal that there was no dividend - confirms they are still in recovery mode and that bankers are still powerful behind the scenes. Still deserving a modest PE
Negative - the interest rate on bank debt rose 130 points in a flat interest rate environment
Negative - the record low bank balance may be a bit artificial. Note 4c has an interest rate of 7.3% and $2,798 of interest at 7.3% requires an average balance of $38m. Opening $41.5m, half yr $34.1m, closing $31.5m. This mix of balances doesn't average to $38m. If any of this interest was at last year's noted 6% then the average balance was even higher.
Positive - The half year EBITDA increased again from $4.4m to $5.7m. If $5.7m's continue for 2018/19 in both half's another good increase will happen next year.
Negative - $148m of FY revenue meant 2nd half didn't grow on the 1st half.
Great - If bank balances in 2018/19 are say $10m lower than in 2017/19 then there's a $730k lower interest cost for 2018/19 ($525k after tax). That's 13% net profit growth, even if underlying EBITDA doesn't grow.
Negative - Cavalier's medium term recent history
Positive - The bean counters considered the gap between NTA and share price and discounted cashflow modelling came in above not below NTA
This is a low-coverage stock so I'd expect the market to slowly digest the result and start to move upwards but this may not happen to the AGM and some forward profitability guidance
Disc holding and considering buying more