Capitalised Dividend Valuation: FY2019 perspective
Quote:
Originally Posted by
percy
Guidance and dividend policy update is positive.
Pity I will miss today's agm.
Underlying NPAT for FY2019 was $10.987m (my post 4642) based on EBITDA of $28.725m. That is equivalent to eps of 14.6c. Dividend over the last year was the equivalent of 15cps. So dividends are already greater than underlying earnings, albeit 'in the ballpark'. If EBITDA rises to something above $30m that corresponds to an EBITDA increment of $1.175m. If all of that flows through to profit, then the incremental eps is:
($1.175m x 0.72) / 75.484m = 1.1cps
The forecast increase in interim dividend from 7.5cps to 8cps will be covered by this. As will an increase in final dividend to the same. So no real news in this mornings announcement, except that it looks like all earnings will be paid out as dividends into the future. The influence of Agria continuing?
It is a mathematically dodgy thing to do to extrapolate from a small number of data points. But if we take last years dividend of 15cps and link that in to a possible dividend of 16cps for FY2020, that makes for a 15.5cps average. If I use my pre-established gross required yield for this company of 8.5%, we can calculate a 'gross dividend capitalised valuation' of PGW as follows:
15.5c/ (0.72 x 0.085) = $2.53
That is fairly close to where the company is trading right now. The MDRT threat that I outlined in 4657 is real. But it will only become apparent if interest rates start to rise again. And as Stephen Guerin has announced a new lower more competitive interest rate he has negotiated with the banks, he has effectively kicked this 'debt threat' down the road.
SNOOPY
PS I have to miss this years AGM too :-(. I hope some sharetrader can report in!