VTL - Vital Telecommunications (formerly Team Talk)

[BIRMANBOY]

Yes W69...the further back I look the clearer it gets. I talked with David Ware last year and one of the things he talked about was TTK was much better than most about generating cash flow. City link and mobile radio particularly. The goodwill impairment hopefully is a one off. I believe they are will overcome current situation and get moving again. As with many things one has to make a decision based on incomplete information. That's the share market for you...either you re-act quickly risking premature sharejaculation or you sit and let things play out in order for a better overall picture.

Birman has amongst some of the derogatory tirade makes some good points.

In some companies NPAT after trends can be misleading and do not always reflect true cash generation. Depreciation etc one of the main culprits in this. Teamtalk is one of those companies, Methven is another.

Their modus operandi appears to be to pay most of free cash flow generated as dividends. Anything left over goes to reduce debt. Occassionaly to keep the dividend steady one borrows a bit more.

Teamtalks cashflows are shown below. Only the last 2 years have dividends exceeded free cash flow (if they had foreseen the whole year they would not have paid as much in the interim). Even with last years numbers they have retail nearly $3m of cash flow.

The big issue is the borrowings to acquire Bay City. Is there any intent to reduce this in the near future or are they hoping for the boom times to come.

Unless FY15 is a complete disaster they probably will generate $3m and pay a 10 cent dividend if they wish to, and have some left over. Will Westpac be happy is the question.

Below is why I prefer to look at cashflows and not EBITDA and NPAT and other things. I believe it gives a clearer picture (even long term eh Birman)

[couta1]

Yes W69...the further back I look the clearer it gets. I talked with David Ware last year and one of the things he talked about was TTK was much better than most about generating cash flow. City link and mobile radio particularly. The goodwill impairment hopefully is a one off. I believe they are will overcome current situation and get moving again. As with many things one has to make a decision based on incomplete information. That's the share market for you...either you re-act quickly risking premature sharejaculation or you sit and let things play out in order for a better overall picture.

I reckon this company will come right given time, operating in a niche market is a big plus in their favour and their products and services are essential to people they sell to and provide services to. At least the weekend break will allow some of the panic sellers to settle their nerves and make a well considered desicion rather than a pure emotive driven one. Disc-Have no intention of selling now or anytime soon.

[samdaman]

Below is why I prefer to look at cashflows and not EBITDA and NPAT and other things. I believe it gives a clearer picture (even long term eh Birman)

I've been following TTK for awhile now and been hoping that they'd pull out of the Farmside tail spin. I was hoping the next report would confirm that and see them back into a nice uptrend. However this doesn't seem to be the case. If you take the last two years out, the two that have been affected by the farmside acquisition then they were showing good signs of FCF growth. For me it just seems odd that 2 years in a row they've paid dividends higher than what they're earning when they're holding that much debt. As someone said earlier on I'll be on the sidelines until they start showing better signs of future growth.

[BIRMANBOY]

Correction to earlier post which I will remove...think I misinterpreted your question.....I value my portfolio based on my capital outlay, not what its market value is today or tomorrow or yesterday. Its true value is what it returns me in dividends as a P A % of my original outlay. If I valued it as a market value then you have a point regards the change from beginning of week till close on Friday. Its market value is probably of little concern to me since I'll probably still be owning most when I die. Even when something is showing large gains (and I've had a few) I don't sell. My goal is build up the % return over the years by buying whenever good buying (low price) occurs. Dividends and interest is re-invested in more of the same. Superior yield can only be achieved and increased by time. Time will/should bring increasing earnings/dividends and occasional accumulation opportunities when SP collapses (hopefully not permanently!!)

Brman, was that 18% earlier in the week or today?

[bunter]

At least the weekend break will allow some of the panic sellers to settle their nerves and make a well considered desicion rather than a pure emotive driven one. Disc-Have no intention of selling now or anytime soon.

Could be just the opposite - last week's sellers made a considered rational decision and the holders are making an emotional one.

[BIRMANBOY]

LOL Isn't the brain a wonderful instrument..a singular set of events, yet ...totally different (and everything in between) interpretations.

Could be just the opposite - last week's sellers made a considered rational decision and the holders are making an emotional one.

[winner69]

Could be just the opposite - last week's sellers made a considered rational decision and the holders are making an emotional one.

And don't forget this was one of these late Friday afternoon bad news stories just a half the country was going way for a long weekend at the beach in the sun. Intent I hope nobody notices ...or forget about come Monday / Tuesday. Sneaky eh

So it be all ok come Tuesday?

[BIRMANBOY]

What will be of interest this coming week will be whether or not any of the TTK board do any buying. Cannot imagine they will be selling but some hefty buying would certainly be sending some messages. Of course a deafening silence could also be sending a different message...or...could be alternatively merely that they don't really give a rodents hindquarters about the SP. Remember David Ware saying he rarely looked at what the SP was doing. Might have had a quick peek on Friday however.

And don't forget this was one of these late Friday afternoon bad news stories just a half the country was going way for a long weekend at the beach in the sun. Intent I hope nobody notices ...or forget about come Monday / Tuesday. Sneaky eh

So it be all ok come Tuesday?

[BlackPeter]

Just spending a couple of hours to ponder on what to do with my TTK shares after the spectacular drop on Friday (i.e. sell after the dust has settled / hold or use the drop as buying opportunity and accumulate).

Looking at the last annual report - they promised to bring colours into telecommunication .. and hey - they did: Lots of red colour in their books. Lets take a mental note ... they stick to their promises

On the other hand - Roger Sowry's promises a 15 cents dividend ... so maybe they don't?

Looking at their sectors:

Mobile radio is where their roots (and IMHO their skills) are, but this is hardly a growth business and contributing these days only mildly to their earnings. Outlook as I see it ... they can play the "last man standing" strategy (though I remember other companies failing to do that) - and hopefully it will keep contributing some earnings for some time, however I think this sector is unlikely to rejuvenate and turn back into the big cash cow it once used to be.

Broadband was in 2014 (earnings wise) the only exciting part of their business ... but given that they are only one of the dwarf players, that they only can make money if the giant (CNU) sleeps ... and if big customers (hopefully not just city councils) have spare cash to spend. Risky terrain - and long term I am not sure, whether they have the skills and resources to take on the big boys in the towns.

Rural (Farmside): losing them currently money, but IMHO their only chance to make money in the future. Farming is in my view as well a good match to their culture (tough white boys working hard, talking tough, playing poker and drinking throughout the night) and the opportunities are small (and special) enough to avoid too much attention from the big players. Obviously - Dairy going down and the drought in many parts of the country probably didn't help to open farmers pockets - but here might be as well a silver lining for the future: farming is cyclical, and when it goes up again, hopefully so will the number of opportunities for Farmside / Team Talk.

Putting all this together - I think if they play it well, they should have still a future in New Zealand ... however unlikely with lots of growth. Which means the best way to value them is likely to look at the long term PE ... and decide which premium one requires for the risk of them getting down the drain (as indicated - in my view not the most likely scenario, but possible).

If I take the last 5 years, than their average EPS was either 10 cents (including the big "good will write off last year) or 18 cents (excluding the said write off). This would put their value (requesting a PE of 12.5) in the range between $1.20 and $2.20. You can do the maths yourself for PE's better suited to your risk assessment.

Given those, I probably put my sell-trigger" closer to $ 1.20 than to $ 2.20 ... and my "buy" trigger would be somewhere (but not too much) below $1.

Exciting times - lets see, what the future will bring.

Discl: Holding ... and wondering why I didn't sold a larger parcel at $1.79 in early December when I had the opportunity (I sold some, though ...); As always - DYOR.

[Baa_Baa]

My investment advisor was around for dinner last night, we had a good chat as always including on TTK, as it's on my yield watch. So fwiw here's some snippets.

"Farmside acquisition has been a really big mistake"
"it was way outside their management capability and in a fraught sector"
"have a number of VERY LARGE holders of TTK, for the reliable yield"
"Monday will be hell, not sure what to do yet, this is a disaster".

However, for those who don't own, or hold regardless, "TTK is now cheap".

This is the story line, http://www.teamtalkinvestor.co.nz/nzx-releases it's grim reading, though the apparent policy of 'pay yield in the face of adversity' may have been beguiling, so one wonders like others have done here, whether they should just keep their money and fix the company first. However, imagine what the share price would do if they're predominantly held by yield focused investors and the dividend was cut completely!

Here's the story in a picture (monthly), and an ugly one at that:

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