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floydf

839 Posts.

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18/11/14

13:45

Post #: 14308074
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Originally posted by neoteric ↑

I think they are indicating an underlying NPAT of above $30m. There will be acquisitions costs involved with the purchase of CRA which will harm the headline FY2015 NPAT.

TGA is not a business I find particularly easy to understand, especially the accounting treatment of the finance and operating leases.

I do however understand cash and debt, and on this score they have dramatically become a more risky investment as net debt has been rising (and moreso with the announced acquisition - I'm surprised there is no capital raising).

I realise that to grow this type of business (high tangible assets) TGA needs increased capital, whether that be from debt or equity. I always remind myself that the very best businesses are the ones that require little or no debt to prosper, they generate enough cash to fund their expansion. So personally I'll be vigilant to ensure the debt levels do not rise from here in order to stay a believer.

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Then why do they keep paying a dividend if they need to lower their net debt? Or at least hold it at current levels to address this issue.

TGA Price at posting: $2.75 Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

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