Been awfully quiet here for a couple of months so I thought I try to put my head out there and try to make a prediction for Howe's full year earnings.
1HY18 reported net profit after tax was $10.9 million. As the key drivers are volume and exchange rates, I referred to this European car sales website to get some clues. The data for calender 2018 is up to April.
Column 1
Column 2
Column 3
Column 4
0
Avg monthly car sales
Land Rover
Mercedez
Audi
1
Period: Jun - Dec 17
12.7
74.3
65.4
2
Period: Jan - Apr 18
14.6
75.3
70.1
3
Delta
15%
1%
7%
4
5
Avg exchange rate
1HY18
2HY18
Delta
6
EUR/USD
1.18043044
1.20738729
2.3%
7
EUR/AUD
1.51439323
1.5733095
3.9%
All the data points towards a better 2HY18 assuming Howe's sales volume tracks the overall car manufacturer's reported sales volumes. The Euro strengthened from Jan to Apr and this led to a higher average rate against the USD (better margin) and AUD in 2HY18.
Which means that there is a good chance that we are looking at Howe's full year NPAT of at least $22 million. With a market cap of $185 million, I would argue the market is only valuing Howe. At this price, you get these thrown in for free - net cash, concrete division, slew of investment properties, development land - 39ha being rezoned from rural to industrial and high density site for 175 unit development.
Oh, and I think there is more capacity left in Howe's Slovenian facility as well.
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