Like some others here, SPK has come onto my radar due to the high yield and recent fall in SP. However, after a closer look I won't be buying just yet.
The company is partially covering dividends out of equity in order to maintain their level of payout, while simultaneously financing major CapEx through further borrowing. By their own figures they are not going to significantly increase earnings in FY25, so a P/E ratio of 17 still seems high. The attraction of this stock is obviously the yield, but the current level of dividend cannot be sustained much longer without a substantial turnaround in revenues. They intend to maintain FY25 dividends at FY24 level, but beyond that I have my doubts (note that the FY25 dividend will already only be 75% imputed). With borrowings set to increase over the next 2 years, falling interest rates will certainly be welcome, but interest payments are likely to rise nevertheless.
I see the SP moving lower in the medium term, and I might become interested if the P/E drops below 12 (circa NZ$2.00).
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