Ann: FY18 Market Update, page-4

AVJ has lumpy income, expenses and cashflow. Looks like NPAT will be about 10% less than FY17, but already $6 mill in the bag for nice FY 19 head start (which they have earned but couldn’t report). With 5c dividend the retained earnings should mean NTA increases to 102c, so SP at massive discount to NTA and gap is growing.

My understanding of reporting requirements means that NTA is based on actual cost of land + actual cost of expenditure to improve the land, NOT estimated actual value when on market. As such, the actual value of assets held is probably significantly higher than NTA. So while it seems mis-priced and may continue to be mis-priced, I feel that the underlying asset values protects from downside risk, and while held I will continue to pick up 10% + grossed up dividends which is really very good value, even if growth is a bit erratic. For this stock, I look at the NTA growth as the guide, rather than earnings growth, as the SP and NTA cannot diverge forever, there will eventually be a catch-up.