Ann: CLH Portfolio Enhancement Programme - 2nd Balbec Transaction, page-4

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SteveSage

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21/06/19

09:39

Post #: 39167831
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Originally posted by joda: ↑

My take on why little growth this Fin Year.
Firstly meeting guidance is positive in my view for what is only a few days till end of the Fin Yr. Again shows they are doing what they said they will do.
Secondly they have had to bed ACM and RML in, surely would have been a headwind on increasing guidance this year plus no immediate benefits from Volt investment (as expected). Which they say will all be positive contributors in 2020.
Thirdly had to get the Collection Services business back on track due to the slow first half following Royal Commission impact on decision making and a major client deferring to 2nd half of year.
All up therefore no clear reason for this last year to have been too flash on top of all their investments.

Looks like the upside is more in whether you believe this years long term investments are stepping stones as positive catalysts for EPS in 2020. They are e.g. at record buying levels for PDL's and collections per hour appear to be remaining at higher levels than in the past.
Getting $25m from this latest deal to buy more has to be a positive if they do not overspend on portfolio purchases.

Based on share price remaining depressed, (possibly exacerbated by Levi M's slow sell down) there appears no institution out there currently wanting to get set for a share price upswing. Can only hope someone sees the solid dividend and this latest transaction as a catalyst for a share price upswing.

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Thanks Joda
Appreciate these things take a while to bed in, but was hoping for some upside in FY2019 (I guess from EPS of 6.1c in 1H, delivering on 15.5c for FY is probably not a easy ask).

On a very rough calculation:
- Volt is ~3m profit for FY2020 (EPS ~2.2c)
- RML is ~2.75m EBIT in FY2020 (EPS~1.1)
- ACM is ~5.5m EBIT in FY2020 (EPS ~2.2)

That means an additional ~5c in FY2020 taking it up to ~EPS of 20-21c assuming no growth etc.

Can't help but think that without the Lev issue hanging over this company, the SP should be conservatively north of $1.60.

CLH Price at posting: $1.26 Sentiment: Hold Disclosure: Held
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