mortgage choice celebrates online success

As mentioned in the cou thread; both cou and moc are great businesses as both require minimal capital expenditure to expand and stay afloat.No balance sheet risk what so all for both moc and cou as the majority of operating profits are returned back to shareholders.If needed to expand then the use of retained profits and growing the equity base shouldn't be a problem for cou and moc in the coming years.

One thing i like about moc is their ability to build on their brand name as more and more Australians are looking for different home loan products/packages and are getting to know the mortgage choice brand name.

Don't be fooled by some analysts and people out there with their continued negative criticism as both pros and cons of any business needs to be weighed up and balanced appropriately before considering to buy or sell. But with moc the "Proof is in the Pudding" i.e. the numbers.I wouldn't be selling at these levels as very soon the market will wake up and realize the value within moc as a business relative to market cap.

By the way most businesses out there will have risk of some sort whether it's competition or short term hicups but what i look for is a track record of profitability as this to me represents the core business performance over the years and more so the score on the board.

If you want to know if management are any good then best to look at past performance i.e. track record for moc as this is a sign of managements ability over the past 5 or so years to do an exceptional job and my prediction over the longer term is for both moc and cou to grow the business at a steady pace resulting in an increased equity base, thus enabling shareholders to enjoy higher dividend yields and increased value within the the business on a moving forward basis.

Dividends are payed out of operating profits and not debt funded like others.High rates of r.o.e and increasing n.t.a. and book values over the years.

My intrinsic valuation for moc is around $1.50 to $2 next year(2011).Others might have a greater intrinsic valuation for moc but these are pritty conservative valuations for myself.

Lets not kid ourselves,this is a cash cow and cash profits are the real profits.Many listed companies on the asx are trading at very high multiples above their book and n.t.a. values and this isn't the case with moc.

Moc has been around for more than 15+ years and are fast establishing their brand name within the market place, sure their might be some short term issues with commissions and the like but with the majority of profits locked in for a number of years to come and the various options out there for diversification then this leaves moc in a position to consolidate on other aspects pertaining to the business and the business model.

The real score on the board is via the moc and cou yearly reports and cash flow statements over the past 5 years or so and looking and comparing these numbers to other listed companies out there that are firstly way over priced and have a lot of debt and gearing issues as well as to much junk on their balance sheets which needs to be written off i.e..inflated intangibles and heaps of goodwill with no justification in the numbers at all.Then one would say that
apart from having very strong balance sheets with no debt and very little for cou, both moc and cou have really prepared the way and set a path for future organic growth.

I would not take notice of analysts changing recommendations day to day as the majority of the time; this is more out of boredom and related to price speculation and not the value of this class act franchise business.

I hold a few shares in moc as i have spent some time to go thru their business model and more importantly the balance sheet and past performance of this business and strongly believe that the brand name will continue to grow organically.

Happy to hold for now and no intention what so all to sell unless an announcement is made in relation to the business performance or the business itself deteriorates rapidly which i really doubt!!! or some aspect of the business tells me otherwise.

But so far this company along with cou are at bargain prices and if the market keeps moving than these prices are history....DYOR....





Below is an article discussing moc.


http://www.franchise.net.au/Article/Mortgage-Choice-celebrates-online-success/508998.aspx

11 January 2010

Independently-owned mortgage broker and franchisor, Mortgage Choice, this month celebrates a number of online milestones including a 17 per cent annual budget increase for search engine optimisation activities.

According to Mortgage Choice CEO, Michael Russell, the leads acquired from online traffic in December 2009 generated 74 per cent of the company's overall volume.

"We're just as proud of the fact that January marks the seventh consecutive month Mortgage Choice has ranked number one on Google's organic search listings for the phrase 'home loan', which provides us with a considerable competitive advantage," he said.

The website is also at the top of the list for other key search terms including 'mortgage brokers', 'home loan brokers' and 'home mortgage loans'.

"It means we are more likely to be top of mind for both existing and potential customers and our franchisees' local pages - their mini-sites within our website - are more likely to be visited by those on search for a home loan," Russell said.

This is promising news considering Mortgage Choice's 2009 Property Investors Survey found that the internet was the primary source used by respondents to source property investment knowledge.

Mortgage Choice isn't just focusing on lead generation. "We're also fine tuning our electronic loans processing technology. This, along with other IT initiatives, is helping us enhance our highly regarded customer service proposition, positioning Mortgage Choice to better take advantage of acquisition and growth opportunities in 2010," Russell said.