Having had a chance to review the 2018 financials I note a couple of things;
The reported EPS of 64.3c includes the provision for back taxes of $3.014m, so based on the ‘normalised’ NPAT of $54.02m the EPS would be 68.1c, so not such a large miss on consensus EPS of 69.7c for 2018. The issue now is that to reach the current 2019 EPS consensus of 77.1c implies a 2019 growth rate of 13.2% against the 10 year CAGR of 10.6%.
Sales increased by 11.8% v expenses increase of 12.2%, leading to a slight reduction in margins.
Cash on hand went from $27.6m in 2017 to $9.2m in 2018 or -$18.4m, receivables were up about 10% and inventories up about 20% YoY.
ROE fell from 18.1% to 16.8%.
As a holder for over 15 years I have no doubt that ARB is a very high quality business but the question has to be asked if these results justify the current valuation with a P/E of 33 and a div yield of 1.7%?
Ann: Appendix 4E and Annual Report, page-8
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