Ahh Homeground, that keeps coming up again and again.
Alright so homeground works only if they have a fifo population coming in - that being the case major shutdowns or maintanance will bump up the occupancy rate thats a given. They paid 54m for home ground a while back now they value at at 80m. From memory homeground is structured so it breaks even at 10-12% occupancy rates; anything above that is profit. And if you talk about buildings turning old, 10 yrs is nothing for a commercial building - am sure many people understand that when they look at for eg the qvb, crown towers etcetc. Now what advantage they have here is they are builders so if anything breaks or needs maintanence it is not going to cost them an arm and a leg , they can do it themselves and within.
If we talk location, gladstone is australia's 5th largest multicommodity post and queensland's largest port
so sure occupancy is 25% but why is that a worry? Even if they write it down further, it's a non cash loss however there is a good tax reason to do so wont you say. eg write down 10mil, you get a 2.65m benefit in tax while not affecting the cash baseline. Capital allocation is important in all businesses, critical even. I dont see that as a problem here as yet and for now.
CEO renumeration is the biggest discomfort i have with this, i think he is overpaid lol. However if you look into the backlines some of the things they are looking at is quite interesting re risk management and having technology mitigate and minimise risks. There is a ppt on how they manage project quotation risks - an interesting read.
Now some ppl compare RCR with this, the problem with RCR is that they did not reach mechanical or electrical commissioning. They couldnt do it hence the big drop and compo. This is different. There is mechanical completion. all panels installed, the substation is 100% energised. R1 can take a while, from what i understand the data for R1 is submitted on time for AEMO approval but AEMO knocked it back as there is a design issue not a construction issue. That is why the company feels it has a chance through the dispute process.
As always DYOR , i really think we are clutching at straws here with a few points that always stick out. I have been reading a lot and didnt really want to contribute - having said that all facts on the table is a good idea and point to start with, some of the info provided here are simply too emotional i guess and can lead ppl astray or induce them to take an emotional path on what should be a rational decision.
DCG Price at posting:
42.0¢ Sentiment: Buy Disclosure: Held
