While it is pleasing to see another analyst slowly realising...

While it is pleasing to see another analyst slowly realising that WHC is worth more than its market price, I find Bell Potters analysis of the DPS very odd (and wrong, unless someone tells me I have missed something obvious).

For this year, they estimate revenue at $7.2 billion, which I think is broadly correct. They then estimate profit at $5 billion, which I think is also broadly correct in light of the higher operating costs this year compared to last.

They then get to an NPAT of $3.3 billion, which should also be broadly right.

However, where it becomes bizarre is with the dividend.

Bell Potter calculate EPS at $3.9 per share. If the full year NPAT is $3.3 billion, then for EPS to be $3.9 they are assuming approximately 850 million shares on issue. We are already down to a little over 900 million shares. They therefore seem to be assuming that only 50 million more shares are bought back between now and 30 June 2023.

Since the AGM a further $250 m has been spent on the buy back to acquire 28 million shares. Even if, for the sake of argument, we assume the remaining 50 million shares (to get to Bell Potters 850 million) costs $600 million (an average price of $12 per share), that means only $850 m spent on the buy back to 30 June.

That would then leave $2.5 billion of the NPAT unspent (assuming for the sake of argument is roughly equivalent to cash). If management paid out all of that in dividends that would be $2.9 per share (2,500 / 850 million). Bell Potter comes up with 96 cents. If management decided that they prefer to sit on $1.25 billion in cash and pay out only 50% of it in dividends, that is still dividends per share of $1.47.

Am I missing something fundamental to their analysis or is just plain wrong?