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Thread: FXL Flexigroup

  1. #81
    Antiquated & irrational t.rexjr's Avatar
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    Quote Originally Posted by trader_jackson View Post
    Annual results came out... this year was in line with expected, it was next year that wasn't so hot... showed no or up to 6ish% drop in profit... not surprisingly investors voted with their feet... the retail investors were first to panic with the share price falling double digits to hit $1.65, on low opening volume. Finished down 5%... and I'm thinking it will be above $1.80 in no time... once people put their patience and thinking caps back on.

    What the annual results showed was EPS of 24.3 cps... confirming what I have said for a long while... that FXL is trading on ridiculously cheap valuations (7.2 at todays closing price)... then again what today also showed is the reason why (reason for now at least)... due to profit expected to be stagnant or slightly off this coming year. What didn't help was the dividend being near rock bottom of the payout ratio (being same as half year - representing bang on 4% yield at today's closing price (fully franked for the aussies).

    Ironically, the underlying business (notably excluding certegy which is one of the key reasons for the stagnant profit) is expected to improve by 5 - 10m, well up from the slideshow last year showing 1 - 6m imporvement in underlying business.

    Opearting cash flows were yet again a highlight, and impairments actually decreasing to their lowest point in years also a slight surprise (for me)... top line growth also there which will flow through to bottom line, just quite this coming year - the aussies are an impatient lot and those in for a quick buck punished share price accordingly (hard to believe it went down to $1.55 earlier in the year - truly stupid times that was)

    FY18 will be one of stabilisation (as mentioned by management) and could even provide some upside in 2nd half.
    FY19 is now the big one... very interesting and informative presentation (makes a nice change!) - I encourage you and others to take a look - can explain much more about the business than I ever could.

    I believe we are in the middle of a turn around, and going to start the upward swing, if not already on it. I reckon $2 by Mid Feb next year (although I would have liked for that to have been a few weeks ago - but the market doesn't like waiting)

    At the end of the day, if you can't wait 6 months to a year, and don't want an above bank interest rate being given to you while you wait, don't buy flexi.
    If you want a stock priced over 2x cheaper than HBL, and likely to provide similar double digit growth in a year's time, and you're happy to wait and get a little bit of cash in the mean time, FXL should be on the shopping list.
    Agreed. I'm glad someone has taken the time to articulate my internal synopsis clearly...

    The exodus of the dividend collectors along with the lack of opportunity for a quick buck explains the volatility for my mind. A change of guard so to speak.

    Holding both HBL and FXL in my investment portfolio so was mulling over the pros and cons of holding both today. Maybe I'm a sucker for their fresh & fancy marketing but FXL has me a little more enthusiastic.

    Golly gosh, buying today through ANZ was tedious. Put in my order for $1.66 and the share price came and went in the seemingly 10hrs it took for my order to be placed. Ended up having to chase the price back up again. I do my trading through ASB and it's significantly faster!
    Last edited by t.rexjr; 15-08-2017 at 08:52 PM.

  2. #82
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    Interesting interview on their website if you haven't seen it yet:

    https://www.flexigroup.com.au/FY17-f...-results-video

    It sounds like FY19 will be much improved, but investments are needed this and next year to (hopefully) achieve this. The reducing EPS and dividend and increasing debt costs in FY17 are not very encouraging, although in future they'll use the reduced dividends to reduce debt costs.

    Contemplating whether to sell out and see how FY18 goes before deciding whether to buy back in. I only have a few so the dividend is going to get slashed by bank fees anyway, and I can't see much improvement in the share price since the dividends and FY18 forecast are reduced, so people's short term valuation would also reduce (even though it's on a low PE).

    Would be interested to hear more thoughts on this.
    Last edited by Elles; 19-08-2017 at 10:30 PM.

  3. #83
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    Quote Originally Posted by Elles View Post
    Interesting interview on their website if you haven't seen it yet:

    https://www.flexigroup.com.au/FY17-f...-results-video

    It sounds like FY19 will be much improved, but investments are needed this and next year to (hopefully) achieve this. The reducing EPS and dividend and increasing debt costs in FY17 are not very encouraging, although in future they'll use the reduced dividends to reduce debt costs.

    Contemplating whether to sell out and see how FY18 goes before deciding whether to buy back in. I only have a few so the dividend is going to get slashed by bank fees anyway, and I can't see much improvement in the share price since the dividends and FY18 forecast are reduced, so people's short term valuation would also reduce (even though it's on a low PE).

    Would be interested to hear more thoughts on this.
    FY18 isn't going to be flash - I think they made this quite clear, although the 2nd half of FY18 should start seeing the right trends.
    What makes FXL a bit unique is that the founder owns well over 20% of the company - he has been there when it has gone from $2.60 in Dec of 2006 when FXL listed to 23 cents just 2 years later, he has been there when it has subsequently rebounded to mid $4 7 years later... he is also still there now - with no selling - today, where the share price has more than halved... he has also been there since day 0... he is likely not concerned with the coming year, and past 2 years being a bit 'rough', he is in the game in a big way and has been for a long time, and likely will continue to be, and happy to wait it out... (asx investors on the other hand might not be so happy to wait it out!)

    FXL are investing to reposition themselves and I believe they will do a good job of this - they have done in the past. The market is still not convinced, hence the PE of just 7, but once things begin to show through in up to year's time, possibly a bit sooner, a re-rating will occur, like it did around 7 years ago and it could be quite logical for FXL to be trading at a PE of 20+ (it has done in the past).

    They have the right staff, F&P is well integrated, they have the money ('headroom') ready to lend, they have the customer base, they are investing in the latest and greatest technologies and new markets - now they need to execute, which can take some time (see the slides on how long it takes to 'convert' a customer - I haven't seen this info disclosed before but found it quite interesting)

    I doub't the share price will go much lower than its current point - 4 traders still has FXL average target price at over $2 (despite recent downgrades), not to mention the 4ish odd percent dividend at current prices - which isn't terrible and far from peanuts. Then again I don't think the share price will go up much past $2 until confirmation of FXL's turnaround can be seen (although I think it should get back to $2 within a years time).

    (I am not sure what bank fees you are paying to receive this dividend? I get my dividend in NZD - and FXL do this all for me)
    Last edited by trader_jackson; 20-08-2017 at 11:19 AM.

  4. #84
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    Thanks TJ, yes I agree it sounds promising for the future, and dividend is indeed set to go straight to my NZ bank account. That's another benefit in itself, a lot easier/cheaper than having to bank a AUD cheque or only offering direct credit to an Ozzie account (not even cheques) like PGC!

  5. #85
    Speedy Az winner69's Avatar
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    Close at 158

    FLX is really becoming a dog of a stock

    Time to cut my losses methinks - haven't been paying enough attention ......bad me
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #86
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    Quote Originally Posted by winner69 View Post
    Close at 158

    FLX is really becoming a dog of a stock

    Time to cut my losses methinks - haven't been paying enough attention ......bad me
    It is not the only one getting a hammering lately, whole financial sector in Aussie having a bad run lately, from insurers to banks. Nearly the whole sector in the red today.

    Crazy stuff really because Aussie economy doing its best in 4 years (or something), you'd think people would be out buying, spending and traveling (on FXL's cards, eg the flight center MasterCard you now see advertised on TV)

    Management made it clear there isn't going to be much improvement for a year from annual results, so a while to wait - majority shareholder, who is also the chairman and founder clearly couldn't care less about 'another lost year' because he hasn't sold a cent. I, along with Mr Chairman/Founder/Majority Shareholder will just have to continue receiving an above 1 year term deposit rate dividend, and live to die another day.
    Last edited by trader_jackson; 08-09-2017 at 09:02 PM.

  7. #87
    Antiquated & irrational t.rexjr's Avatar
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    Ex div yesterday, but didn't think it would drop too much if at all. That said I did sell half yesterday as I felt I was a little over weight. I have faith, and time...

  8. #88
    Speedy Az winner69's Avatar
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    I sometimes wonder if the emphasis they put on 'securitisation' (when they talk about leverage) makes punters a bit wary.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  9. #89
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    Quote Originally Posted by winner69 View Post
    I sometimes wonder if the emphasis they put on 'securitisation' (when they talk about leverage) makes punters a bit wary.
    I'm sure it does... I know a few people have wondered "why is debt so high" when it is quite normal for their business model.. isn't securitisation meant to 'help' turners with their EPS growth or something?

  10. #90
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    Quote Originally Posted by trader_jackson View Post
    I'm sure it does... I know a few people have wondered "why is debt so high" when it is quite normal for their business model.. isn't securitisation meant to 'help' turners with their EPS growth or something?
    It certainly does.
    In Turners case the loans being securitised are low risk, as Turners have a history of low default loans.
    So Turners get cash up front from the sale of the loans, packaged up and sold securitised,and can then recycle the funds.
    GFC was caused by poor low grade loans being packaged up and sold as first grade loans.
    It is therefore very important to understand the quality of the loans being packaged up and securitised.

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