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.
Originally Posted by Baa_Baa
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