Hi Cam,Received your spreadsheet and loved its simplicity and...

Hi Cam,

Received your spreadsheet and loved its simplicity and comprehensiveness.

Completely agree with your conclusion of the debt reduction expanding equity holder's portion of the EV with 0% growth in EBITDA, and the uplift in NPAT due to declining financing cost.

Although I cannot help being concerned about the latest update of a 6% decline in FY13 first quarter EBITDA. That was in the CEO's AGM speech. I have not been following it that closely lately, and assume there is no positive update on the trading? All eyes on the H1 release now i guess. With none of the headwinds ceasing in the near future, I cannot help typing in -6% in the EBITDA growth forecast, which meant a 5% capital depreciation in FY13 from FY12.

Relatively recession-proof and cashflow steady as it is, it's simply got little growth prospect, in my humble opinion...

Near future growth prospect, if any, will depend on (1) industrial and construction activities in Australia picks up (which may happen with the recent and maybe a few more future rate cuts lifting the housing activities) and (2) Christchurch rebuilding ramps up.

In the meantime, its competitors have the financial flexibility to grow through acquisition (which may not be wealth adding to their share holder, but nonetheless is changing TPI's competitive landscape gradually. Toxfree (asx:tox) for example acquired DMX. TPI had a strategic holding in DMX but had to let it go.) and geographical expansion into high economic activity regions (TOX again, acquiring Absolute Liquid Services in the Coal Seam Mine service business in QLD). I am not an advocate for TOX btw, but it does compare sharply with TPI. Expanding through acquisitions often does not create shareholder value, as you pointed out lots of times and I agree. However the fact is that TPI simply does not have much financial flexibility to acquire business even if it's highly complementary or to organically build capacities in growth areas. Most free cash flow will simply have to be applied to reducing debt. Fingers crossed they will not reduce maintenance capex and run down their asset...

I held TPI for a while. I reluctantly sold after the recent negative update on Q1 based on above concerns around possible decline in EBITDA and lack of growth prospect despite the debt reduction and corresponding equity value improvement...