I have followed the Chairman, Geoff Selig, since listing in 2015. I think it may be worth relistening to the interview he gave post the last set of results, from which I have drawn some further confidence regarding the medium to long-term outlook for the company.
The key takeaway points that resonated with me are:
- The business is in good shape overall and well-positioned to perform in the current economic environment.
- There is no major customer concentration across a largely blue-chip customer base.
- The company is diversified across a range of business streams and has diversified its earnings base markedly since listing (yet it gets rated as a 100% old-style printing business in decline).
- Yes, the MGM was a bit lower last year driven primarily by absorbing the lower-margin Ovato business. This is expected to normalize over FY 2024 & FY2025.
- Yes, cash conversion was in the %60s and not the usual %90s, a result of the increased working capital uptake following the consolidation of Ovato and also the bolstering of raw material supplies given the post-COVID uncertainties. This is also expected to normalize over the next couple of years.
- The balance sheet, while carrying more debt, remains in good shape and within covenant.
- Any shareholder who has been on the register since listing has received $1.05 of fully franked dividends over this period.
- I expect the dividend to be largely maintained as cash conversion improves and even if it is trimmed a bit, it is likely to still offer an above-average yield.
- In summary, a well-run company with a management that has skin in the game, with #1 market share in most of its categories on a single-digit multiple paying a double-digit ff yield. I like it.
https://www.finnewsnetwork.com.au/MediaCenter/MediaCenterMobile.aspx?Site=FNN2443
Disclaimer: Please do not rely on any of my comments, expectations, or figures and do your own research.
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$2.06 |
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0.060(3.00%) |
Mkt cap ! $319.0M |
Open | High | Low | Value | Volume |
$2.02 | $2.06 | $2.00 | $750.7K | 369.7K |
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No. | Vol. | Price($) |
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1 | 3930 | $2.04 |
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Price($) | Vol. | No. |
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$2.06 | 6350 | 2 |
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No. | Vol. | Price($) |
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1 | 3930 | 2.040 |
2 | 5830 | 2.030 |
2 | 22900 | 2.020 |
2 | 11500 | 2.010 |
2 | 6302 | 2.000 |
Price($) | Vol. | No. |
---|---|---|
2.060 | 6350 | 2 |
2.070 | 3930 | 1 |
2.080 | 3930 | 1 |
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2.150 | 976 | 1 |
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