Ann: Guidance update FY19, page-21

Daicos, I can agree with most of what you have stated..but will put these other viewwpoints:

The recent announcement is as significant in what they didn't say as to what they did. The 1H NPAT sounds reasonable until you look under the hood. Specifically look at the $278m in contracted sales @ June 2018 - $109m of which were due to settle in 1hFY19 and $61m in 2H19. Surely this would suggest a skew to 1H earnings in their initial $40m NPAT prediction...certainly well in excess of $20m...so we have come up well short in 1h and now they are telling us that the sales they were expecting in 2H will/might be deferred into FY20.

I think its dangerous to assume 2H will be the same as 1H. Frankly, I really think they will be struggling to do a FY19 NPAT of $25m - because of lower volume and lower margin.

Speaking of margin, VLW stack up very well here when compared to the public competitors of SIO and TWD. But, in tougher times, rebates and enducements are required to drag a sale across the line and VLW are not immune here. Plus, they are concentrating on lower margin land sales, which is smart in not tying up capital.

VLW's cash position is pretty solid with undrawn facilities plus cash at June 2018 of some $45m. The first loan of significance which needs to be considered is $90m in October 2020. Plus, they have also stated they are not embarking on any land acquisition programs so all the operating cash is available for (1) buy-backs (2) debt reduction and (3) dividends. I figure Cash Ops will be $60m to $70m in 1HFY19 so the company might have financial headroom of around $90m on Dec 31, after having paid the final dividend of $14m and some $4m in buybacks.

I think a prudent and conservative board will cut the FY19 final dividend back to 5c to 8c and plough more cash into buy back which will increase the eps to around 20.4c (based on 123.5m shares come June 2019.
Ironically, the last time the VLW NPAT was around $25m it was June 2015 and the share price was around $2.00 on an NTA of $2.00. Enough said.