half year accounts, page-2

From criterion today,seems a bit harsh saying avoid the stock,like the rest of us, criterion does not always get it right.Small % of my portfolio,bought at $5.50,I am prepared to wait and may buy on the dips.

Cabcharge Australia (CAB) $5.83

AS with so many interim reports, there's more than one way of interpreting the performance of this clip-the-ticket taxi payments operator.

Cabcharge's interim net profit declined 9 per cent on a year-on-year basis, to $29.5m. Given the taxi game is fairly unseasonal, we'll settle on the more positive December half/June half comparison, in which case earnings edged up 1.9 per cent to $29.7m.

The key message is that fares processed by Cabcharge rose 7.9 per cent to $519m. Given Cabcharge is the dominant processor of non-cash fare payments, this indicates that taxi patronage has picked up after last year's round of corporate belt tightening. "There are corporate positive signs of improvement in the Australian economy but, like others, we remain cautious," the company says.

Cabcharge earns its crust from taxi-related services, including fleet and radio centre ownership, training and panel beating. Its golden goose is a 10 per cent cut on all Cabcharge card or docket transactions, but others want a share of this lucrative fowl.

Cabcharge more recently diversified into bus fleets in NSW and Victoria, via its joint venture ComfortDelGro. The bus side still has a few stops to go before it's a meaningful contributor, although its Victorian routes -- acquired via last year's $150m acquisition of Kefford -- is "performing to expectation".

Cabcharge faces criticism of its business methods. In a legal action due to be heard in October, the competition regulator alleges Cabcharge breached the law by refusing to allow suppliers of rival eftpos terminals to process Cabcharge transactions.

Cabcharge says it's in a "strong position to defend" the action. We had Cabcharge as a long-term buy at $5.30 in June last year. While the ACCC case could take years to play out, it will weigh on the share price in the meantime. Avoid.