Scenarios 'Stacked Up' against each other (Part 2)
Quote:
Originally Posted by
Snoopy
I think it might be instructive to see my three 'future scenarios' stacked up alongside each other.
Three Profit Forecast Scenarios |
Pessimistic View (Post 13411) |
|
Middle View (Post 13429) |
|
Optimistic View (Post 13438) |
|
|
FY2021 |
FY2022 |
FY2021 |
FY2022 |
FY2021 |
FY2022 |
Baseline Reference Profit |
$74.5m |
$74.5m |
$74.5m |
$74.5m |
$74.5m |
$74.5m |
Reverse Mortgage Adjustment |
$23.7m |
$36.8m |
$33.0m |
$51.8m |
$54.1m |
$87.3m |
Motor Vehicle Finance Adjustment (New) |
($11.4m) |
($17.1m) |
($11.4m) |
($17.1m) |
($11.4m) |
($17.1m) |
Motor Vehicle Finance Adjustment (Used) |
($11.3m) |
($22.6m) |
($11.3m) |
($22.6m) |
($11.3m) |
($11.3m) |
Business Finance (Part 1) O4B Adjustment |
($6.3m) |
($3.6m) |
($5.3m) |
($2.1m) |
($5.3m) |
($2.1m) |
Business Finance (Part 2) 'Intermediated' and 'Relationship' Adjustment |
($15.5m) |
($15.5m) |
($15.5m) |
($15.5m) |
($10.9m) |
($5.4m) |
Rural Finance Adjustment |
$0m |
$0m |
$0m |
$0m |
$0m |
$0m |
Harmoney and Other Consumer Lending Adjustment |
($3.6m) |
($7.6m) |
($3.6m) |
($3.6m) |
($3.6m) |
($3.6m) |
Total Forecast NPAT |
$50.1m |
$44.9m |
$60.4m |
$65.4m |
$86.1m |
$122.3m |
No. Shares on Issue |
581.0m |
581.0m |
581.0m |
581.0m |
581.0m |
581.0m |
Earnings Per Share |
8.6cps |
7.7cps |
10.4cps |
11.3cps |
14.8cps |
20.1cps |
I have humoured everyone by cutting straight to the 'answer'. But this is a situation of considerable uncertainty as to which (or any?) scenario of the ones I have produced is realistic. To understand just how realistic any of these scenarios might be, you have to know what information i put into the model to come up with the answers I did. If I tell you that, and you realise that the profit projections I gave were a result of merely 'turning the handle on the sausage making machine' without any further input from me, then that will allow better judgement as to whether any of the profit projections that I have made make any sense. The table below shows the revenue changes that I have assumed for FY2021 and FY2022 that have changed from the 'base case' (EOFY2019). I am saying nothing about FY2020. I am 'looking through' the current year result because it is likely to be distorted by the advent of Covid-19. So it won't be a good 'base year' to work from.
Three Revenue Forecast Scenarios |
Pessimistic View (Post 13411) |
Middle View (Post 13429) |
Optimistic View (Post 13438) |
Reverse Mortgage Adjustment |
Zero Growth => +6.7% compounding existing loans |
2.5% Growth => 6.7% + 2.5% = 9.2% compounding of loans |
8% Growth => 6.7% + 8% = 14.7% compounding of loans |
Motor Vehicle Finance Adjustment (New) |
45% reduction in new three year contracts => 15% reduction in annual revenue (FY2021) reducing to a 7.5% reduction in annual revenue (FY2022) |
45% reduction in new three year contracts => 15% reduction in annual revenue (FY2021) reducing to a 7.5% reduction in annual revenue (FY2022) |
45% reduction in new three year contracts => 15% reduction in annual revenue (FY2021) reducing to a 7.5% reduction in annual revenue (FY2022) |
Motor Vehicle Finance Adjustment (Used) |
10% reduction (FY2021) with a further 10% reduction (FY2022) |
10% reduction (FY2021) with a further 10% reduction (FY2022) |
10% reduction (FY2021) with revenue stabalising (FY2022) |
Business Finance (Part 1) O4B Adjustment |
80% of loans wiped out for two months (FY2021). Reduction in remaining loan balances of 15%[, not compounding (FY2021 & FY2022) |
80% of loans wiped out for two months (FY2021). Reduction in remaining loan balances of 10%[, not compounding (FY2021 & FY2022) |
80% of loans wiped out for two months (FY2021). Reduction in remaining loan balances of 10%[, not compounding (FY2021 & FY2022) |
Business Finance (Part 2) 'Intermediated' and 'Relationship' Adjustment |
Relationship: 16% compounding loss over two years to EOFY2021, then stable
Intermediated: 10% loss from base level (not compounding) |
Relationship: 16% compounding loss over two years to EOFY2021, then stable
Intermediated: 10% loss from base level (not compounding) |
Relationship: One off 16% loss from base level to EOFY2021
Intermediated: 10% fall over FY2021, before recovering all of that fall in FY2022 |
Rural Finance Adjustment (None) |
Zero Growth |
Zero Growth |
Zero Growth |
Harmoney and Other Consumer Lending Adjustment |
Collapse of Harmoney over a two year period |
Harmoney halved in size from FY2021 |
Harmoney halved in size from FY2021 |
None of the above information is new. It has all been disclosed in various previous posts of mine. But something is added by reproducing all of this information together in one place.
SNOOPY