That is a fair point. And I agree that the steady buy back has...

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10/01/23

08:45

Post #: 65609102
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Originally posted by madamswer: ↑

"it’s already priced in. If EBITDA is half last year then EV/EBITDA is 2 instead of 1…"

Mathematically correct, but it needs some qualifying comment in relation to what happens to the rest of the P&L below the EBITDA line.

Because this business has a big D&A line (mostly the "D" part - relating to depreciation of leased assets), it means that if EBITDA halves, EBIT craters by 75% and Pre-Tax Profit by over 80%.

Six months ago, I was salivating at the prospect of buying this stock a lot cheaper and, despite the activity in the residential property market being more severe than I had expected, the stock is in fact a cent or two higher than it was back then.

I guess a buyback program in an extremely liquid stock will cause that.

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That is a fair point. And I agree that the steady buy back has helped the price (and also been a responsible use of cash by management).

With the strength of the balance sheet and the deeply entrenched love of property that we have in AU I think the long term prospects for the business are very strong and the current price is attractive. Once expectations for interest rates shift slightly from increasing to flattening the price of this stock could lift very quickly leaving little window to get in at the perfect moment.

MEA Price at posting: 38.5¢ Sentiment: Buy Disclosure: Held
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