You still need a fair price though, so there is no escaping...

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petepan

1,708 Posts.

28/08/14

18:33

Post #: 13889837
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Originally posted by Psychiatrist ↑

I like businesses that analysts find hard to value, things like valuation based on earnings ( without looking at cash flows) , not factoring in impact of depreciation and amortisation, not dividing growth capex and maintainence capex and looking at capex as one , ignoring operating leverage etc etc. this is the reason why companies like voc, gbt, ved , ctd, alu, seem expensive . But this in itself is a moat ( so other investors that look beyond numbers and understand business can keep accumulating) .
It is one of the reasons why buffet uses owners earnings and the subjectivity in his owners earnings is related to maintainence capex. Growth capex is good as petepan outlined, as long as the ROIC emails good , which on looking at voc numbers is very good.
This is not to say I know any better than them, but I believe I am buying the business rather than the current valuation, it's the future that looks bright to me.

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You still need a fair price though, so there is no escaping valuation even if the future is so bright you have to wear shades.

How about a stab at valuation Psy? On my rough reckoning, before the impact of FX Networks acquisition, I have estimated VOC's FCF (OCF less maintenance capex) to be in a range of $40m to $50m for 2015, putting it on a multiple of 10x to 12x on current market capitalisation. My estimate already factored for the Vodafone EBIT reduction, because I believe this reduction will be compensated partly by volume increases. VOC's internet revenue figures are staggering, surpassing even my most optimistic guess. Can you even begin to imagine data demand once the NBN is up and running?

VOC Price at posting: $5.24 Sentiment: Hold Disclosure: Held
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0 Great analysis

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