I have done some sums for next year based on NFK's recent reports and presentation. The big change will be in dividends. Their latest outlook statement confirmed a return to dividend policy, which I understand to be between 50-65% of NPAT. Using NFK's outlook for 5-10% profit growth, this would mean EPS of around 14c next year, so the dividend should be at least 7c, compared with 2c this year.
Then there is the lovely problem of what to do with all the surplus capital (the remaining 7c per share of profits). As there is no net debt, NFK has the choice of doing a share buyback or making some acquisitions, both of which should mean higher growth in the next few years.
Other positives are that its ROE is now in the range 20-25%, and cash flow even better, and possible further upside if they can get Haden profitable again.
All in all, it makes a forward P/E of around 8.7 look great value.
These are my opinions only, so DYOR.
NFK Price at posting:
$1.24 Sentiment: Buy Disclosure: Held
