TGA (ASX) Good news or bad news?

Insomniac

At http://news.morningstar.com/articlenet/article.aspx?id=768418 Morningstar values TGA at $1.80. This analysis does not mention an expected dividend decline, so there may be other published Morningstar material on the subject of TGA.

Many TGA-related articles put out by so-called analysts are so incorrect in respect to facts published by TGA, that one can only conclude the analysts have never studied TGA material. The give-aways are when analysts refer to business units that have been closed as being current, or they state that TGA is into payday lending, which has never been the case, except in the minds of jihadists waging war against providers of SACCs and MACCs, which is a business that TGA has recently abandoned due to low profitability. Loansharks must love these jihadists.

Getting back to the matter of dividends, the FY16 Annual Report stated, “We believe the underlying performance is illustrative of the group’s potential from this position and the Board’s preparedness to pay a healthy final dividend reflects a positive perspective on the outlook.” This could imply that using TGA's historical payout ratio of 50% (55% in recent years), the 11.5c dividend paid reflects an expected EPS of circa 23c, which is within my current guesstimate range of 21c – 24c. My extrapolation could not be confidently defended if questioned. However, Management's words and actions suggests to me that they are loath to reduce dividends, and keen to get back to the historical upward trajectory.

One regulatory fear often mentioned is that TGA's customers could be denied using Centrepay for consumer leases. The Department of Human Services, has thus far not supported that view, and even if it did, it does not have a free hand on the matter. When the Department decided to debar welfare recipients from using Centrepay to pay for funeral insurance with effect from 1 July 2016, the Federal Court of Australia overturned the plan, with Justice John Logan describing the Centrepay ban as "paternalistic" and unlawful. See https://www.humanservices.gov.au/cu...yments-aboriginal-community-benefit-fund-acbf

The SP dropped this morning, so I ended up getting the residual 5,175 shares that I mentioned yesterday as having remained on the table at $1.525 when the SP closed at $1.54.