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23-11-2021, 08:03 PM
#1251
Originally Posted by winner69
I note Free Cash Flow was again negative
Yet they continue to pay hefty dividends - thus needing to borrow more than they should have had to. ( H1 FCF negative $17m and dividend $$8m and borrowings up $29M)
And the dividends are unimputed so generous shareholders pay a tidy sum to the taxman
Just doesn't make much sense this insistence on paying dividends
The SP would be gutted if they stopped the div. That’s the foundation of the NZ market. Lots of folks enjoying their income.
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23-11-2021, 09:44 PM
#1252
Originally Posted by winner69
I note Free Cash Flow was again negative
Yet they continue to pay hefty dividends - thus needing to borrow more than they should have had to. ( H1 FCF negative $17m and dividend $$8m and borrowings up $29M)
And the dividends are unimputed so generous shareholders pay a tidy sum to the taxman
Just doesn't make much sense this insistence on paying dividends
I agree. I would prefer the increased profitability from lower interest costs.
I don't need the dividends at present and would prefer not paying the tax. Capital appreciation would do nicely.
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23-11-2021, 09:48 PM
#1253
Originally Posted by Baa_Baa
The SP would be gutted if they stopped the div. That’s the foundation of the NZ market. Lots of folks enjoying their income.
I wonder. Some of the best NZ companies are not big dividend payers. MFT seems to do OK with relatively small dividends.
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23-11-2021, 09:50 PM
#1254
Would people actually invest in a retirement stock for the dividends?
Never really understood borrowing to pay a dividend. Guess with a property company it’s slightly different and better to just watch net debt vs assets rather than fcf
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24-11-2021, 08:31 AM
#1255
Originally Posted by Rawz
Would people actually invest in a retirement stock for the dividends?
Never really understood borrowing to pay a dividend. Guess with a property company it’s slightly different and better to just watch net debt vs assets rather than fcf
Suppose having about $2.2 billion assets and having about $1.3 billion in debt is quite OK
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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24-11-2021, 08:32 AM
#1256
For Bars update this morning..
OUTPERFORM
We reinstate coverage of Arvida Group (ARV) with an OUTPERFORM rating and a 12 month forward target price of
NZ$2.65. With this note we incorporate the acquisition of Arena Living into our forecasts. We believe the stable and cash
generative nature of the acquired villages complements ARV's newer and less cash generative portfolio well. We estimate
that cash from ongoing operations will almost double as the acquisition is incorporated which, in combination with strong
cash recovery of capex, should result in largely self-funded growth, inclusive of paying a dividend going forward. Given its
strong underlying growth, we believe at 13x FY23 P/E ARV offers one of the best risk rewards in the NZ market.
What's changed since prior to the capital raise?
Our view on the Arena Living acquisition
We view the Arena living villages as complementary to ARV's current portfolio. The six villages are mature and highly cash
generative. While we expect maintenance capex to be comparatively high at around ~NZ$10m annually, we expect net cash flow from
the villages to be >NZ$20m annually, almost doubling our previous forecasts. In addition, the Arena Living portfolio comes with an
extensive brownfield pipeline of >300 units. However, while we view the price as attractive, we estimate that there is unlikely to be
any material organic growth in the contribution from the villages as higher DMF is offset by lower resales gains as prices normalise.
Steadily making progress towards its capability of organically delivering units in-line with larger peers SUM and RYM
At the 1H22 result ARV released details of its two new greenfield sites as well as the acquired brownfield pipeline with Arena Living.
In combination this takes ARV's pipeline to seven years of development, larger than Ryman Healthcare (RYM) and approaching the
sector leading Summerset (SUM). We believe this to be important long term. We apply a 40% valuation premium to SUM and RYM
versus ARV when we set our target price due to the proven track record of organic growth through greenfield projects. ARV is still
only one-third through its first greenfield project but is progressing well. Should ARV start to continuously deliver greenfield projects
with good cash recovery of capex, we see potential for ARV to re-rate materially higher than implied by our target price.
Valuation; ARV is valued at a material discount to its larger peers despite stronger growth prospects
ARV is currently trading on ~13x FY23 P/E and ~20x FY23 EV/Annuity EBITDA. RYM is on a ~100% premium to ARV despite similar
growth in NTA, lower underlying earnings and annuity EBITDA growth as well as substantially lower cash conversion.
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24-11-2021, 08:52 AM
#1257
Good that Forbar and me on same wavelength
PE of 13 and target of $2.65
Conservative though - as when market aee ARV earnings more than double in F23 they will get really excited ...ARV share prie 3 bucks by end 2022
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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24-11-2021, 09:02 AM
#1258
Thanks GWD. Interesting that $2.65 / $1.94 is a bigger percentage gain than if OCA rerates from $1.30 to $1.71 (average analyst price target).
Underlying forecast PE of just 13 for FY23 looks very reasonable indeed for this sector.
A bob or two each way on OCA and ARV at current prices looks like a pretty good strategy to me for 2022 and beyond.
Last edited by Beagle; 24-11-2021 at 09:17 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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24-11-2021, 09:07 AM
#1259
Forsyth confirming the obvious - anything under $2 really is too cheap.
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24-11-2021, 01:26 PM
#1260
Originally Posted by trader_jackson
Forsyth confirming the obvious - anything under $2 really is too cheap.
Right on t_j
I’m beginning to think that many will now see ARV as a far better investment than OCA …at least over the next year or so.
ARV going to double earnings in F23 ….OCA won’t be doing that (maybe 20% if they are really lucky)
Obviously Forbar clients buying today …momentum will keep on going
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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