I have for a long time valued TGA at about $2.60, and I decided I would revisit this valuation when the half-year announcements are made in the latter half of November 2014. My instincts tell me that I am more likely to increase this valuation marginally, than reduce it.
All valuations are are based on subjective guesstimates, so a 5% or even 10% margin of latitude would be normal in the sense that 5% leeway is more certain than 10%. These two points are arbitrary shorthand for a probability distribution. 5% latitude suggests a range of $2.47 and $2.73. It does not surprise me that the SP has tended to the low-end of the distribution since closing at $2.60 on 09/10/2014, because sellers have outnumbered buyers for many weeks. In the absence of any relevant news of which I am aware, I am surprised on fundamental reasons that has happened. Below is a snapshot of the buy-sell dynamics at about 1:00PM today.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 1 |
|
Buyers
|
|
|
Sellers
|
|
| 2 |
No.
|
Volume
|
Price ($)
|
Price ($)
|
Volume
|
No.
|
| 3 |
|
|
|
|
|
|
| 4 |
12
|
7001
|
2.47
|
2.49
|
123318
|
10
|
| 5 |
4
|
28871
|
2.46
|
2.5
|
36885
|
6
|
| 6 |
11
|
35791
|
2.45
|
2.51
|
14470
|
2
|
| 7 |
2
|
10400
|
2.44
|
2.52
|
3000
|
2
|
| 8 |
1
|
4115
|
2.43
|
2.53
|
18000
|
3
|
| 9 |
1
|
5400
|
2.42
|
2.54
|
2800
|
1
|
| 10 |
3
|
23000
|
2.41
|
2.55
|
51795
|
5
|
| 11 |
4
|
10058
|
2.4
|
2.56
|
17986
|
1
|
| 12 |
2
|
2000
|
2.39
|
2.57
|
5000
|
1
|
| 13 |
1
|
4000
|
2.38
|
2.58
|
10000
|
1
|
| 14 |
|
|
|
|
|
|
| 15 |
70 buyers for 242,278 units
|
53 sellers for 484,794 units
|
|
|
|
|
To have wanted to exit when TGA's EPS was plateauing would have been understandable, but to exit now when the EPS is on the cusp of a new upward trend seems odd in the dearth of alternative targets wherein one might invest. In loose terms I concur with the current Thomson Consensus Estimates, which are:
…....... 2014 … 2015 … 2016 … 2017
EPS … 18.9 …. 20.7 .… 22.7 …. 24.8
DPS … 11.0 …. 11.3 …. 12.5 …. 12.9
I think EPS for FY2017 may be a bit better, because the $1.76M amortisation of NCLP's Customer Relations would have ended, and that should add $1.76M/150M = 1.173 to the EPS. DPS will tend to be rounded, so I expect something like 11.5c, 12.5c, and 14c for 2015, 2016, 2017. Because an amortising expense does not flow through to cash flow, TGA might pull back my suggested 14c DPS to 13.5c.
Let us see what happens to the SP in November, and how the market reacts to the half-year announcement expected 19/11/2014.
