BFG Beautiful Franked Growth Coy, page-16

Have been overweight BFG for around 4yrs since 60c and have always been amazed how ignored it is by the market and trades on a far discounted P/E to sector peers despite a stellar >5 year growth record compared to often stagnant peers.

the ROIC has been great and the divi’s >10% with franking..

I have order to buy a few more at 1.81 given the lack of bounce with the result.... as they say “water your winners”.

the main triggers coming up to a re rate over time will be:
- strong guidance at their presentation in feb and an increased divi
- continued cost savings and revenue growth from their recent strategies to keep flowing through (see recent presentations for details of each of these)
- small cap funds buying up based on fundamentals for value and growth and yield
- broader coverage of bfg by brokers over time as market cap expands and track record too
- individual investors hungry for the huge yield
- increased liquidity as market cap expands
- inclusion in asx300 then possibly even 200 in next couple of years which would allow more fund managers to then invest
- bfg will be looking for how to manage their cash given they have no debt, so the two options will be (1) acquisitions and (2) a share buyback on market; either would drive the sp higher
- conversely , bfg could actually be a takeover target themselves for a bigger fund manager or someone like Macquarie due to their rich IP in software / broking/ research platforms which they have developed but bigger inv banks would love to own; they also have >60b FUM which could be absorbed and thus eps accretive

I expect 2.00 over the next few months barring a major broader market pullback of course( 2.00 is Morningstar’s present fair value estimate even prior to today’s result, so will go up to probably 2.20 now)

but I won’t be selling a single share. I still plan to hold for a further 5 years and expect the 200% CG + almost another 100% divi return thus far to keep growing