This note from Simply Wall Street:New major risk - Dividend...

This note from Simply Wall Street:

New major risk - Dividend sustainability

1

The dividend is not well covered by earnings and cash flows. Payout ratio: 97% Cash payout ratio: 362% Dividend yield: 5.6% This is considered a major risk. Companies that pay out too much of their earnings and cash flows are at risk of having to reduce or cut their dividend in future. If earnings or cash flows stagnate or fall, then there may not be enough to maintain the same dividend. Or in extreme cases, companies may opt to dig into capital reserves or take on debt to maintain the dividend. For dividend paying companies, any reduction in the dividend can significantly impact the share price. Currently, the following risks have been identified for the company: Major Risks Interest payments are not well covered by earnings (2.2x net interest cover). Dividend is not well covered by earnings and cash flows. Payout ratio: 97% Cash payout ratio: 362%

Mixed broker ratings following their HY25 results release reflecting a mix of optimism and caution, with varying perspectives on Kelsian's performance and future outlook.:

1. Macquarie: Maintains a "Neutral" rating with a target price of $3.50. They highlight concerns over increased expenses and the need for improved cost management.

2. Morgan Stanley: Reiterates an "Overweight" rating with a target price of $4.00. They are optimistic about the company's future growth and strategic initiatives.

3. UBS: Downgrades to "Sell" with a target price of $2.80, citing concerns over declining EPS and increased leverage.

4. Citi: Maintains a "Buy" rating with a target price of $3.90, focusing on the company's strong revenue growth and contract renewals.

5. Credit Suisse: Maintains a "Hold" rating with a target price of $3.20, emphasizing the need for margin expansion and better cost control.

I have been a holder of this stock on and off since 2016. As Sealink I managed to eek out a total return of 1.39%. I regret having re-entered in 2022 following in on director buying. In hindsight I should have sold out following release of FY24 results announcement and Chairs' AGM address. I sold my remaining shareholding today at a loss of 36%.

This stock was covered on Auzbiz 'the call' today. Both Luke Winchester and Ben Richards have it a 'sell'. For those investors intending to stay the course, it is compulsory viewing.

GLTAH