Ratman, as far as I know of the big brokerage houses covering CUS you have Bell Potter, Credit Suisse and Ord Minnett. There are a few smaller houses floating about that also have or have had reports out on CUS. It may be worth suggesting to CUS management that brokerage reports be posted on the website like other ASX listed companies do - I might take that one up (they may be on the website already given I havent checked it in quite a while now).
From memory Bell (at least the last report I saw) has the lowest EPS expectations I think coming in under 20cps, and I think current Credit Suisse and Ord Minnett forecasts are between 20 and 24cps for 2010. My current personal EPS estimates are between 25cps and 30cps for 2010 - so obviously rightly or wrongly (we will know soon enough) I am more optimistic.
There are a lot of variables that make precise forecasting difficult including transaction volumes (we havent yet enjoyed a full year of direct charge which makes forecasting on previous periods difficult and problematic), the level of decline which CUS has not briefed the market on (i.e. the number of punters deciding not to pursue a transaction once they become aware that they will be paying CUS $2.00 odd - this is differnt to the stated fall in transaction volumes of 10%)as well as the extent of any fee increase and the proportion to which that fee increase is rolled out across the fleet - we've heard from shareholders that went to the AGM that CUS has taken steps to test tran numbers at $2.50 (with only a 1% decline rate in tested areas which really is exceptional news), however we dont know to what extent that will be rolled out across the fleet, and for obvious reasons CUS is staying Mum on that one. We also dont know to what extent the ramping up of advertising opportunities via the CUS fleet will filter through to the bottom line in 2010. 2010 being the first solid year of direct charge is going to be the platform from which accurate forward forecasts are going to be made.
Keeping in mind if the market doesnt correct against the post March 09 Rally (I'm getting more nervous on this front) and as Ord Minnett have suggested CUS justifys a PER of at least equivalent to the small ordinaries index, which is about 15 at the moment, then every increase of 1cps in EPS is eqivalent to a 15cents in the share price. Based on a range of between 20cps and 30cps for 2010 you are looking at a potential SP of $3 and $4.5 adopting a back of the envelope valuation techniques for the 2010 period. Dont forget that CUS management have indicated they are targeting and think that CAGR of approx 10% is achievable, so that coupled with the beatiful defensive, cash producing and high margin business management have morphed CUS into, would suggest a PER of 15 is justifiable.
The half year results are generally released to market in the second or third week of February - they are going to be very interesting indeed, and Im already hanging to see them and look through the numbers (NB: an advanced warning, the July to Dec period is as stated by CUS a stronger period so we wont be able to just double the first half earnings to estimate a full year result)
CUS Price at posting:
$2.81 Sentiment: LT Buy Disclosure: Held
