Ann: TY23 ASX Release & Investor Presentation, page-19

• Whilst I love dividends, I don't mind if they stay with the company for appropriate capital allocation.
• KAR appears to generate ROE / ROIC > 20% (subject to Oil Prices, as a commodity producer). If they keep this performance over time, I bet they are allocating capital better than me! LOL
• It is a growth company, which requires CAPEX/OPEX to grow and diversify (conversely to a tech play).
• Looking purely from a dividend perspective, the chances for frustration are high in my opinion, as management appears to prioritize inorganic growth through M&A and organic growth in Brazil
• Looking from a business growth perspective, I believe they are doing the right thing - it is important to diversify the asset base across different jurisdictions and assets to increase certainty in revenue and decrease business risks (e.g. Imagine oil prices go low and some sh*1 happens in Brazil? (regulations, problems in OPs, increased royalties, etc?)
• For me, the key question for me here is/are: How good are the inorganic and organic growth opportunities presented? How good is the management team?
• My knowledge in Oil and Gas technicalities are superficial - the organic growth is good in Brazil (or appears to be), excellent ; the inorganic growth through M&A, for obvious reasons, is unknown. If management allocates capital poorly, our cash is gone!
• If there is more unknown in the equation, discount rates for FCF will get higher, and NPV will go down (therefore, valuation gets compressed - i.e. below $2.0).
• Really Appreciate inputs and contrasting views on these comments to enrich the discussion!