AGL - Accordant Group. was previously AWF Madison, Allied...

[Baa_Baa]

Thanks Snoopy, most enlightening.

[minimoke]

Snoopy.
One analytic missing: impact of new CEO. Culture change from Awf flavour to madison flavour so far unquantified.
= risk

[Snoopy]

Snoopy.
One analytic missing: impact of new CEO. Culture change from Awf flavour to madison flavour so far unquantified.
= risk

I agree Minimoke. New strategy, new culture, new head: how to measure that? I would like to say there is a fudge factor to cover that contingency, but of course there isn't. For those who want to watch from the sidelines for a bit to see what happens, well, I wouldn't call them foolish. Myself, I am comfortable watching from the inside. But each to their own....

SNOOPY

[Snoopy]

They are paying down debt.

You are 100% technically correct Noodles.

However, taking one step backwards, if AWF had first raised the new capital (the same amount) then bought Madison would your answer not be that they raised the new capital to buy Madison? I don't think it is any secret that if AWF had not bought Madison they would not have needed their recent capital raising. IOW the new capital structure, after debt is paid down, has been 'right sized' for the Madison acquisition to be bedded in.

Perhaps I should have worded my previous post more carefully. What I meant to say was it will be interesting to see how the acquisition of Madison and the accompanying new debt structure compares in ROE terms with the sort of ROE figures that AWF were generating in the five years prior to the acquisition of Madison.

SNOOPY

[Snoopy]

Thanks Snoopy, most enlightening.

Thats OK Baa. I should add that it would have been nicer for existing shareholders if their capital invested in AWF had been revalued upwards by the market rather than crabbing sideways. But then again, the sideways crabbing 'value' while the underlying business performance improved opened up the opportunity for new shareholders to join the AWF share register at a reasonable price.

SNOOPY

[Snoopy]

I think Snoops hypothesis is earnings have recovered and will grow and that in 10 years time it will deserve a PE of 13. Reading snoops mind I don't think he gives a stuff how the share price gets to his model value of $3.45 in 2026, as long as it that price then. But isn't it spooky,really spooky, that his target of $3.45 is about what it was 2 years ago. Just shows how wrong / stupid the market was 2 years ago. That change of sentiment reflected in your charts.

As you well know Winner the market can become wildly exhuberant or drown in the troughs of despair. In between are bouts of rationality.

I am not saying that AWF deserves a PE of 13. I am saying that over the last five years that is somewhere near the average where Mr Market has priced it. On average I am not going to say that Mr Market is wrong, even if at odd times he may be.

Come 2026, there is a very good chance the PE won't be 13. And yes just because my modelling shows a big leap in profitability for FY2017 and more modest gains in the years after, that doesn't mean this is the way the improved profitability that I am forecasting will actually pan out. How it gets there is less important than getting there!

If I needed the money in 'about' ten years, then I would start looking at the market again in say eight years. Mr Market might have got ahead of himself? So it could be a good time to exit? OTOH maybe Madison had just lost an important client and the AWF share price has plunged? In that case perhaps I might need to hold for twelve years to get my 'ten' year return. In markets nothing is that tightly pinned down. You have to be a bit flexible in your exit strategy.

Best guess is still a share price of $3.44 in 2026 though, even though that precise figure forecast will almost certainly be wrong at the 'cash in' date. I am not really sure why the share price spiked to near $3.44 two years ago. Perhaps an even larger dividend was expected from the sale of the healthcare operations than the 3c bonus dividend that shareholders ended up with?

SNOOPY

[percy]

I sold our holdings in AWF a few days ago.
Felt the labour hire business was at maturity, and was doubtful of the growth prospects for Madison.
Had held for a number of years.

[stoploss]

I sold our holdings in AWF a few days ago.
Felt the labour hire business was at maturity, and was doubtful of the growth prospects for Madison.
Had held for a number of years.

Percy sorry to see you go ......Madison hopefully have 500 ex Fonterra employees to place ....

[percy]

Percy sorry to see you go ......Madison hopefully have 500 ex Fonterra employees to place ....

Yes I am sorry to leave.AWF has been very kind to me.I think I brought in around $1.03/$1.05.Then added more.Then sold some just over $3,and recently took up the cash issue.
From what I can understand, there is little to stop new entrants to the labour hire sector,and I think in fact, AWF cut back on their low margin business,so to really to stay in business ,or expand they needed Madison.The projections made on the Madison acquisition have not been achieved.
So where to with Madison?.Well I am not sure.From what I am told "social media" is altering the whole sector.Employers are going, via social media, direct to the people they wish to recruit,by passing agencies,such as Madison.

[winner69]

Everybody happy after the ASM by the looks of it, especially the directors eh. Chairman gets a decent pay rise.

At least profits look like ahead of last year