RFG Surely Worth a Buy Now..., page-123

I preface my comment by saying that I am a CPA accountant.

So there is a change in accounting policy which may impact the future way in which profit is calculated for RFG.

Nothing has fundamentally changed with the company. The company is still making the same cash flows (regardless of how accountants prepare their profit & loss), and it is the cash flow that should dictate the valuation of share price (net present value of future cash flows), not some arbitrary P&L prepared by accountants, in accordance with accounting standards.

The impact that the new accounting policy may have may include;
- a change in reported profit, P/E, perhaps dividend (if management maintains dividend payout ratio) and perhaps impacts on banking covenants).
But importantly, the company cash flow will not be impacted.

For UBS analysts to say that the RFG share price target should be $4.70 (from their previous share price target of $5.70), i.e. the company is worth 17.5% less than previous, due to a change in accounting policy and how P&L is reported, in my opinion is rubbish. It seems to me they are using this for another agenda, most likely to push the RFG share price even lower for their shorting strategy for their clients.

I have a low opinion of UBS.