@6186mark - apologies, I should have a "Hold" sentiment. Have changed accordingly.
I'm not too worried about Monday's open. It will drop, given they didn't meet guidance, but there's no reason why cash flow should be less than 15cps, even after the earnings 'drop'.
Think of it this way. PBT for 2nd half is always stronger (usually 50-60%). Let's use a 40% figure, leaving Underlying PBT at 14m for the half, 24m for the full year.
- PBT = 24m
- PAT = 16.8m
- Add in approx. 2.5m for amortisation of customer contracts (cash still flows, even though the 'expense' is there). Therefore, Cash Flow = 19.3m
Cash flow per share = 15.2cps
At $1.80, that's a P/E of 12. Given the payout ratio, that's a FF dividend of about 8%. If they decide 100% of NPAT rather than cash flow, that's 7.4%.
This is why you buy with a margin of safety (at 30m PBT, that was well and truly the case). Should things not go to plan, your margin is gone and you've bought it at approximately fair value - hence, no risk of permanent loss of capital.
As for revenues - the target was 1bn in revenue for the full year. Again, the Dec Half is the weaker of the two, and they've made 50% of the target. In my mind, revenues are not a problem, only the expense side of the equation.
DDR Price at posting:
$1.80 Sentiment: Hold Disclosure: Held
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