qrn ipo, page-14

Had a good read of the QR national prospectus and look at QR National would put most value investors with Philip Fisher and Buffett style return off...

don't look at it as a $2.50 - $3.00 a share look at it this way, it put thing into perspective on how silly some of the floats are

Imagine I am a Billionaire and I have $6.1B dollar spare
would I buy QR National whole business?..

Let run through some simple checks

I use $2.50 for calculation, the lower end even then it doesn't even come to make it an adequate investment...

Earning: 287.92 Million FY11 (21 times earning) ROE 4.7%
Earning: 368.44 million FY12 (16.5 times earning) ROE 6%

man chucking 6.1B into the banks get me year one $368.44M without any risk associated with it, no capex to worry about, no headaches of running a business, no union to deal with, no worry about slow down in Asia

Why would I risk my capital for return on equity less than our beloved banks offer?
but other could argue this company can grow and current price would look justified

again I put in a simple take on this business
can this company grow to 13 Billion dollar company in the next 8-10 years? and make three times the money it making now?

possible but highly unlikely ... look how much capital it need to reinvest in the business just to keep it going

and the 1.1B they going to invest return just 40M EBITDA a year with peak at 170-190M EBITDA..again what shocker return....

at this sort of return in my book you cant get there

if I was to put my 1.1B on the line I want 160M NPAT from year one not 170M EBITDA crab after a couple year.

I have more faith in TGA and CCV double its market cap in less than 10 years than QR National ever will.. I owns both stocks by the way just to be clear I don't spruik
my own interest...

Selling a capital intensive dinosaur with shocker return on equity as a growth story? Thanks but no thanks.. I hand this one back to mr market and hand QLD
government for a a very nice road show beautiful brochures and my pre-registration paper in the recycle bin.....

This does not mean stock wont goes up when listed, the market is a weird place lot of stuff goes up for no good reasons...but I for once will not put my capital at risk for this high risk adventure...