By COB today, 870,7977 shares were transacted. The average for the 254 previous trading days is 328,402 shares, so today was a high-volume day. I do not know why there was such a sudden surge of interest.
The current SP is still low in my opinion, and in the opinion of whomever producers the Aspect Earnings Model, which I cut and paste as:
.......................................... Company .... Market .... Sector
Aspect Earnings Model .......... 0.46 .......... 0.91 ....... 0.85
I do not normally pay attention to this value, and neither do I understand it, other than that more than 1 is supposed to be expensive, and less than one inexpensive. That a company of TGA's quality has an Aspect Earnings Model score equal to about half that of the market as a whole suggests to me that TGA is undervalued.
TGA's Interim Report is scheduled to be published on 17 November, so we may as well wait for that to come out before indulging in guesstimating what EPS and DPS are likely to be for FY2016 and 2017 as the basis for a share valuation. In July I wrote that the reported EPS was 20.34c for FY2015, and that I expected it to grow by 9%, so for now I'll stick with 20.34c x 1.09 = 22.17c for FY2016, and DPS should be about 12c. I hoped in earlier months that the PER would be 14 or 15, but now I am not sure – market sentiment is gloomier now than then.
To Crazypunter.
We agree on a crucial point, and that is that the bulk of TGA's contracts with its customers are credit contracts that are subject to the 48% cap, and regulated in other ways pursuant to the latest NCCP act. What this means is that threats that are specific to other types of contracts (pure rental, for instance) are not relevant to TGA in a significant way.
We differ on what the retail prices should be. I maintain that the retail price is the price that TGA chooses to apply, and you seem to maintain that it is the price that other mongers of similar goods apply. I have googled the topic, and I have not found any evidence that Government attempts to control the price of household goods, except if prices are too low, and deemed to be “predatory pricing” – pricing designed to knock competitors out of the market.
A court of law could, in my opinion, look through the disguise of a contract, and rule that a high purported retail price was a ruse to circumvent a 48% interest cap, but then those prosecuting the case would have to evidence that fact. As far as I know, TGA does not normally sell goods for cash, but if one wanted to pay cash, TGA may well accommodate the offer, but not at a discount to its established retail price.
As an aside, TGA may have abandoned the retail initiative called Big Brown Box a few years ago, because it could not shift volume without discounting, and discounting would have opened up the charge that it breeched the 48% interest cap. Also, TGA's huge shift from pretend operating leases to finance leases in FY2015 may have been to avoid the perception that it was substantially in the unregulated leasing business. TGA's management would be aware of threats coming down the pike long before we poor mushrooms know of such threats, and management would adapt the business to obviate the risks. Radio Rentals has been in the subprime business since 1937, so I expect it to keep one step ahead of legislation and Government policy designed to protect “the vulnerable”.
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