CUP bad news brewing?, page-12

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millimouse

272 Posts.

65

15/01/18

21:45

Post #: 30323975
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Originally posted by Jack1960 ↑

Milli, I think you will find the share price decline trend is a composite of all the issues you raise as well as the exiting accounting affiliates selling their stock on the market, as well as a lack of confidence in the then management to direct the ship.

Most of prior management were around in the days of Count Ltd that simply made money on the back of rising investment markets. There was no magic to management skills.

After CBA acquired Count, Countplus became the "spin off" with dreams to replicate the financial planning model with accountants. Sorry, oil and water rarely mix just on their own. The SP was supported by a whopping 12cps dividend paid quarterly, underpinned by a CBA annual "fee" tp Count of $2m. Meanwhile, no one really managed the accounting business. Effectively all cash generated was paid out in dividends.

Successive market shocks had a huge impact on the share price as dividends decreased and profits decreased in a continuous down trend. I would suggest market/institutional confidence was totally destroyed in this period and never returned, despite the huge $16m profit from Class Ltd,

Class is now gone. The one-off gains have been (sensibly) used to retire debt. The future of the business now rests in the ability of management to retain the best members and grow the business either organically or acquisitively. The Direct Equity Plan is a way of keeping the good business in the group, but rewarding the accounting practise owners as individual entrepreneurs via their direct ownership.

It is a reasonable working model, but as yet remains unproven.

So long as confidence is low and the model unproven, this stock is unlikely to be re-rated. Once either or both of these matters changes, a re-rating is more likely than not and the SP may once again reward longer term holders.

Until then, this stock is a sleeper with periodic fits and starts and panic attacks, as the last 2 years have demonstrated.

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Many thanks Jack. I cannot agree more with you now.
CBA fees were not sustainable at the beginning in my feelings. But essentially CUP was an uncovered excellent share in my eyes. Its key financial indicators are still well above the sector average. I could not understand how its performance in the market is so ignorant of its fundamental indicators.
Now I see it is the wisdom issue that drags in the firm into the muddy pool.
Strategically and tactically the new management has a lot to do.

CUP Price at posting: 56.0¢ Sentiment: None Disclosure: Not Held
1 Upvote

0 Great analysis

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(20min delay)
Last 64.5¢		Change 0.000(0.00%)		Mkt cap ! $108.8M

Open	High	Low	Value	Volume
66.5¢	66.5¢	64.5¢	$153	235

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No.	Vol.	Price($)
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Price($)	Vol.	No.
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No.	Vol.	Price($)
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1	18209	0.640
1	12099	0.635
3	24923	0.630
3	16100	0.625

Price($)	Vol.	No.
0.670	8673	2
0.675	2480	2
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