So given underlying FY earnings growth of ~30%, when the first half was essentially flat, we are looking at growth rates in the order of 45-50% when annualised (H2FY20 v H2FY19). With a consistent payout ratio of 80% gives this a prospective dividend yield of 8.5% versus a risk free rate of 0.25%. More importantly, early indications are that there are sustained changes in demand.
There are so many levers for upside including: - export markets with a lower AUD - inflation of consumer goods - competitive advantages over international competitors at the distribution level given Covid and the lower AUD tailwind - possible flagged cuts in the domestic corporate tax rates - long term structural tailwinds to an inflationary environment in the years ahead - consumer sentiment changes towards home grown in the domestic market
Not sure what the market is seeing that I am not- this is cheap on any metric, under any foreseeable economic scenario moving forward.
PTL Price at posting:
39.5¢ Sentiment: Buy Disclosure: Held
