ANZ Forecast Dividend Scenario Analysis (FY2012 -FY2016 data) Attempt 2 Valuation
Quote:
Originally Posted by
Paper Tiger
So when do we actually get the forecast of future earnings, dividend payout and do we get a valuation with that?
I can hardly handle the suspense any longer.
Best Wishes
Paper Tiger
I start from the 'Average Across Five Scenarios' 'Gross Dividend: NZ Investor Perspective'. That figure comes out at $1.524 per share. And this is one key to the valuation.
The other key figure is a bit more subjective, and you as an investor need to answer the question.
"For a bank such as ANZ, what is the gross yield that would feel comfortable with?"
You could say that banks are a quasi-utility that will be there through thick and thin. I use a 6.0% figure for those.
Yet the ANZ, like all the big 4 Aussie banks, has an ivory tower institutional division that does all sorts of high powered stuff with currencies, futures and options. Regular bank customers on the street would go into shock if they found out if they found out their safe solid bank was doing this stuff. Luckily it is so incomprehensible that even half the people who work in the ANZ institutional division do not understand what is going on. So no-one worries about it. Very occasionally it all blows up with dramatic effect, such as in the GFC. Boring bank shares I would accept a 6% yield from. But with 'institutional stuff' going on behind the scenes I would add in a further 0.5% 'risk factor' to the ANZ.
So my answer to the question I posed is 6.5%:
Divide 'return' by 'the yield' and you get the share price that I would feel comfortable paying:
$A1.524 / 0.065 = $A23.44 or in NZ dollar terms
$A23.44 / 0.95 = $NZ24.67
Current share price on the NZX as I write this is $NZ30.90, which is 25% above my 'comfortable valuation'. So this means I should sell down, or does it?
SNOOPY
Whilst waiting for my movie companions
I am sure that every value investor does not like, and avoids, paying a high price.
But what you regard as a high price based on your approach others see as a good entry point.
We all have our share of buys that went the wrong way don't we?
But hopefully in the long term we are all the richer, in wisdom as well as dollars.
Best Wishes
Paper Tiger
ANZ Forecast Dividend Scenario Analysis (FY2012 -FY2016 data) Attempt 3 Inputs
Quote:
Originally Posted by
Snoopy
Divide 'return' by 'the yield' and you get the share price that I would feel comfortable paying:
$A1.524 / 0.065 = $A23.44 or in NZ dollar terms
$A23.44 / 0.95 = $NZ24.67
Current share price on the NZX as I write this is $NZ30.90, which is 25% above my 'comfortable valuation'. So this means I should sell down, or does it?
The answer is no, I should not sell down, or at least not sell down on this revelation. Why not? Because my analysis is done from an NZ perspective. Even though I am an NZer and live in NZ, the ANZ share price is largely driven by Australian investors living in Australia. So in my mind it makes most sense to look at this share from an Australian perspective.
Quote:
Originally Posted by
Snoopy
Note:
1/ All dollar figures listed are in Australian dollars, unless specified otherwise.
2/ Because the New Zealand Dividends are not fully imputed, I am assuming that the gross value of imputation credits passed on will not be affected as the gross dividend is reduced.
Note:
1/ All dollar figures listed are in Australian dollars, unless specified otherwise.
2/ Because the Australian Dividends are fully franked (at 30%), I am assuming that the gross value of franking credits passed on will reduce in proportion as the gross dividend is reduced.
|
Scenario FY2012 |
Scenario FY2013 |
Scenario FY2014 |
Scenario FY2015 |
Scenario FY2016 |
Average Across Five Scenarios |
Annual Declared Dividend 'cps' [(final) + (interim)] (imputation credits excluded) |
$1.42 |
$1.52 |
$1.74 |
$1.81 |
$1.75 |
Actual Dividend %ge of 'Cash Profit' |
69.3% |
71.4% |
67.4% |
68.6% |
81.9% |
Scenario First Adjustment: Declared Annual Dividend 'cps' [(final) + (interim)] (62.5% payout ratio) (A) |
$1.28 |
$1.33 |
$1.61 |
$1.65 |
$1.34 |
Actual Number of Shares on Issue EOFY (B) |
2,744m |
2,757m |
2,757m |
2,903m |
2,927m |
Scenario Number of Shares on Issue EOFY (C) |
2,927m |
2,927m |
2,927m |
2,927m |
2,927m |
Scenario Second Adjustment: Normalise Dividend for Today's Number of shares (A) x [(B)/(C)] => {D} |
$1.20 |
$1.25 |
$1.52 |
$1.64 |
$1.34 |
Gross Dividend: Aussie Investor Perspective {D}/0.7 |
$1.71 |
$1.79 |
$2.17 |
$2.34 |
$1.91 |
$1.984 |
SNOOPY
ANZ Forecast Dividend Scenario Analysis (FY2012 -FY2016 data) Attempt 3 Valuation
Quote:
Originally Posted by
Snoopy
I start from the 'Average Across Five Scenarios' 'Gross Dividend: NZ Investor Perspective'. That figure comes out at $1.524 per share. And this is one key to the valuation.
The other key figure is a bit more subjective, and you as an investor need to answer the question.
"For a bank such as ANZ, what is the gross yield that would feel comfortable with?"
You could say that banks are a quasi-utility that will be there through thick and thin. I use a 6.0% figure for those.
Yet the ANZ, like all the big 4 Aussie banks, has an ivory tower institutional division that does all sorts of high powered stuff with currencies, futures and options. Boring bank shares I would accept a 6% yield from. But with 'institutional stuff' going on behind the scenes I would add in a further 0.5% 'risk factor' to the ANZ.
So my answer to the question I posed is 6.5%:
Divide 'return' by 'the yield' and you get the share price that I would feel comfortable paying:
$A1.524 / 0.065 = $A23.44 or in NZ dollar terms
$A23.44 / 0.95 = $NZ24.67
Current share price on the NZX as I write this is $NZ30.90, which is 25% above my 'comfortable valuation'.
I start from the 'Average Across Five Scenarios' 'Gross Dividend: Aussie Investor Perspective'. That figure comes out at $1.984 per share. And this is one key to the valuation.
The other key figure is a bit more subjective, and you as an investor need to answer the question.
"For a bank such as ANZ, what is the gross yield that would feel comfortable with?"
You could say that banks are a quasi-utility that will be there through thick and thin. I use a 6.0% figure for those.
Yet the ANZ, like all the big 4 Aussie banks, has an ivory tower institutional division that does all sorts of high powered stuff with currencies, futures and options. Boring bank shares I would accept a 6% yield from. But with 'institutional stuff' going on behind the scenes I would add in a further 0.5% 'risk factor' to the ANZ.
So my answer to the question I posed is 6.5%. From an Australian perspective though, I get a slightly different answer. The New Zealand Official cash rate is 1.75%. The Australian Official Cash Rate is 1.5%. To reflect this difference, I am reducing the yield I require from ANZ by the difference in those two figures, 0.25%. This means the new yield I am happy with is 6.25%
Divide 'return' by 'the yield' and you get the share price that I would feel comfortable paying:
$A1.984 / 0.0625 = $A31.74 or in NZ dollar terms
$A31.74 / 0.95 = $NZ33.41
Current share price on the NZX when I started this exercise was $NZ30.90, which is 7.5% below my 'comfortable valuation'. This result, and giving the share price some room to breathe, tells me that ANZ is 'hold' at these prices.
From an investor perspective, I like to buy at below fair value. So what if I was in the market to buy some more ANZ? For a quasi-utility type investment this means a 20% discount to fair value, a price of $NZ26.73 for ANZ.NZX shares.
SNOOPY