Ann: Change of Director's Interest Notice , page-16

This year's final dividend and EPS are not the big issue (they will be roughly what folk expect), it is the next two years that are a concern. They could easily retreat by 25%, and may retreat more than that, and this is what is probably frightening investors and traders.

When a director bought 100,000 shares for $83,754, one could reasonably presume he thought they were worth more than 83.75¢ each - say 20% more, which roughly approximates $1.00. The subsequent SP increase to $1.455 (or whatever its high was) may simply have been getting too high for a spooked market looking for margins of safety (MOS) of 30% or more.

I seem to recall that the last guidance mooted a profit range of $90-$96 million, which is 30¢ to 31.5¢ per share, so I am unsure why the Thomson Consensus Estimates gives 33¢ as the expected EPS for 2013. What is more concerning is the viability of the Thomson Consensus Estimates for 2014 and 2015. For the record the current estimates are:

- - - - - 2012 - - 2013 - - - 2014 - - - 2015
EPS - 37.0¢ - - 33.4¢ - - 33.6¢ - - - 33.4¢
DPS - 14.5¢ - - 12.9¢ - - 13.7¢ - - - 15.0¢

If EPS retreated by 25%, from the 31¢ that I suggest, they would be something like 23¢ or 24¢ in the two subsequent years. These number may suggest a fair value of say $1.70, but applying a MOS of 30% brings this back to $1.20.

I do not hold ASL, and because of recent investments in NWH and BYL, I have no intention to get more exposed to this sector, so I have not undertaken any research beyond a quick glance at Westpac-supplied metrics. Consequently, many of the numbers above, especially in the previous paragraph, are devoid of any supporting logic, so treat them lightly.

Had I noticed the stock when it was trading circa 83.75¢, I probably would have taken a punt on it at that SP, rather than buying BYL and NWH recently.