Trade Me (TME)

[Hoop]

This TME market has been in a long term down trending price channel for 15 months and it is still continuing...maybe it should be called a long sighted market..eh?.......but...wait....there are faint signs something positive may be happening with the TME market attempting a double bottom pattern...A rise above 3.65 will help to confirm if this is true....

[warthog]

Touched $3.65 a minute ago.

Where to from here Hoop?

Resistance becomes support?

[Hoop]

Touched $3.65 a minute ago.

Where to from here Hoop?

Resistance becomes support?

Yeah R becomes S once above $3.65...and also forms a higher high...At the moment though TME is still trendless...However a number of buy signals got triggered today..... so the chances of the TME price breaking the $3.65 resistance and help create a short term uptrend is very good..
A quick look at the chart shows the TA target price if the breakout occurs would be around the $3.85/ $3.90ish area

[warthog]

R now S. Next R around $4.10.

Source for buy signals getting triggered yesterday?

[duncan22]

Latest real estate listings for Auckland :

TradeMe - 8,418

Realestate.co.nz- 9,432

Losing ground and showing no sign of regaining.

Update a month later - not losing ground but not gaining either:

TradeMe - 8,290
Realestate.co.nz- 9,248

[winner69]

Still watching

TME struggles to get above 360/370 these days. I feel the TME price will at best be trend less for some time and hang around the current mark mainly supported by the dividend. That dividend is not that great really is it.

Wouldn't take too much for sentiment to change an that downtrend could continue - maybe down to 300/325

One would hope that all those extra people and added costs are. Going to deliver growth else things could get a bit ugly.

I might hunt around for a proxy to get into the ASM just to hear what Jon says about progress. And a chance to vote against David.

Macs Bar quite a nice place to go to on a fine day. Meeting could be a hoot.

[Beagle]

Bugger all growth, consensus 2015 EPS by 11 analysts of 20.42 cents puts them on a 2015 PE of 17.7. Its been in a steady decline since June 2013 when the market has been strong, looks like a great way to tear up money to me investing in this obviously mature stock.

[bunter]

(20/8/14) Quick take

Revenues up 10%, flat in general items (as per my assumptions). EBITDA +4.3%, NPAT up 1.9% in a tough year when expenses are rising fast.

Forecast for double digit revenue growth, but subdued EBITDA growth (I read as 5-7%) is a little weak, but cash generation is rising better than that.

Will come back with more detailed analysis in a few weeks.

Mod, would be interested to hear your thoughts on the outlook and fundamental value. My crude model says it's worth 3.71.

[modandm]

Mod, would be interested to hear your thoughts on the outlook and fundamental value. My crude model says it's worth 3.71.

Hi bunter. No big changes to my assumptions below (from early August) - update to valuation given better FY14 result than expected, and to put forward multiple of 18x rather than 20x. I do think it could trade up (no pun intended) to 20x, but lets be conservative. My model is very crude here, and I think I am underestimating costs this year, so take a pinch of salt.

The investment case is simple really, this company can grow top line nicely, but is currently ramping investments and costs up. When this slows (next year), operating leverage comes in and earnings accelerate.

General items revenue growth of 1% next 5 years.
Revenue growth of the classifieds business at 15% over the next 2 years, then 10%. Other revenue growth at 10%p.a
Costs overall I see going up 10%, 9%, 7%, 7%.
Depreciation and amortization I model up 25%, 15%, 10%, 10% this somewhat factors in further acquisitions.
Interest income +10% then 5%pa (small numbers)
Interest expense declining 5%pa (small numbers)

The result of this is eps growth of 8.2%, 10%, 7.7% and 7.9% over the next few years (accounting for stock issuance).

FY18 eps of 27.8c - put that on a forward multiple of 18x, $5.01. Add dividends with modest growth = 60% total return, over 3 years. That's about 17%p.a from $3.65.

Given the strong balance sheet, high margins, low capital intensity, monopoly position, and cash conversion I think it warrants these multiples if growth can be sustained at these rates.

Attractive to me, I think its low risk, good reward. If they make more acquisitions, could be even better. They could also increase leverage (from a low starting point), and increase ROE and capital returns which would further boost total return.

What's my current valuation? Or what would I sell at today? About $4.50. At that price, based on my estimates total return per year to my base case would be 'just' 10%, and I think I can do better (don't we all)...

A final thought - this stock is best suited to the patient investor, its a compounder, not an exciting cyclical or high growth/high risk stock.

-Mod

[Baa_Baa]

The price chart, fwiw, is encouraging with the recent breakout from med-long term trendline resistance, setting up for the test of horizontal resistance around $375 .. probably test that today.

A breakout (up) would help confidence that a new uptrend has begun. Respect of resistance sees the price stuck in a horizontal channel between $340 and $375.