Because of the discretion that Management has to value its PDL assets, it can via the current accounting standard engineer NPAT to suit its agenda in any one year. It is like an old-fashioned grocer selling dried beans, he could balance his scale by either changing the counterweights, or by changing the quantum of beans. This is why I wrote the following in my 07/06/2021 post 53681858
NPAT for FY18 was $64.290m, so if we assume NPAT for FY21 is going to be $88m, the formula gives a CAGR of 11.03%, which fractionally eclipses the 11% LTI hurdle. Management has little incentive to do better than 11% CAGR, so it probably won't try to show NPAT much above $88m, IMO. Holding it at circa $88m makes hitting the CAGR in FY22 easier. The current guidance for Fy21 is $85 to $90m – surprise, surprise.
Now what was the NPAT? $88.1m. Thank you for putting me into the line of thinking that referenced Management incentives. The $95m that you mooted on 17/03/2021 was possible, IMO, but it did not suit Management. I write this because I remain convinced that by not reversing the Covid-linked PDL asset-value impairment, there is hidden value there that can buffer profits for a few years, which leeway is what makes Management's NPAT guidances so reliable.
If you take the latest FY22 guidance of $85m – $95m, we can surmise from a dozen years of history that reality will transpire to be close to $95m, but NPAT guidance can be extended in later guidances. I'll leave you to look at the incentives, and every time an NPAT guidance is published, you can pick a viable NPAT that suits Management.
Other than to focus on the substance of this post, I have not examined the Announcements so I'll stop here.
CCP Price at posting:
$28.51 Sentiment: Hold Disclosure: Not Held
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