@madamswer
First of all, welcome to the lonely and forgotten world of ASW, I've been here since 2010!
One thing you will like about ASW is how fast they pay their dividends.
The interim dividend announcement is usually made well before the half year report is released, and paid one to two weeks after it is announced (also before the half year report is released).
As for the final dividend, it is usually announced at the same time as the release of the full year report and again paid one to two weeks afterwards.
I know these things have nothing to do with ASW's valuation but I thought I let you know of some of ASW's little quirks that you will no doubt discover yourself in the coming years.
ASW as a company has a huge operational leverage. This is clearly shown in the latest result, where revenue increased by 17% and NPAT increased by 30%. In other words, the incremental NPAT margin on the incremental Revenue is a massive 40.4%.
From the top of the cycle in 2013 to now, ASW experienced approximately 13% contraction in the number of clients and yet ASW was able to maintain NPAT relatively constant at around $1.5 million level before growing it again to $1.85 million in 2016.
The managing director is still relatively young and always keeps close tabs on every single line of expenses.
As for your reference to 20% of operating cash flows required for capital consumption, I believe that is way too high. In 2016, the figure is indeed 20%, but that was due to the purchase of another small office in Sydney CBD. If you look at the history, I believe it's more around 10%.
In fact, during the dark period of 2012 and 2013 when the mining boom imploded, ASW's capital expenditure was only $26,791 in 2012 and $0 in 2013!
I don't know about you, but personally I like it when my company is being run like a tight ship! It also doesn't hurt when the business itself doesn't suffer in the slightest when being deprived of capital expenditure for two whole years.
My investment thesis when I first purchased ASW back in 2010 was my expectation that SOL would move the registries of all of its related companies to ASW. I presumed that the financial benefits to ASW of these moves would be quite substantial.
At the time, only BKI was already with ASW. I was hoping that SOL, BKW, NHC, TPM, API, CLV, DTE, PGS, QHL, RHL, WCL would gradually move over to ASW. Alas, apart from SOL the mothership which did move, the others never made the move!
It's been more than 4 years since SOL made the move and the others haven't followed suit. I had no choice but to stop holding my breath. But if one day some of the big ones like NHC, BKW, TPM, API do move, ASW will enjoy a nice boost to its bottom line!
