TRS, H1 guidance and dividends

It will be interesting to see how the TRS share price trades over the coming weeks if there is no trading update. Under the ASX listing rules, TRS must update the market if profits are going to deviate more than 10% from guidance (and could still disclose if less than 10%). Accordingly, if we hear nothing, it will mean H1 NPAT will be in the range of $14.4m-$18.7m (i.e. a 10% divergence from the guidance of $16m-17m).

Accordingly, as a worst case, the absence of an announcement means H1 profit must be at least $14.5m and probably higher. If we then assume that they can achieve breakeven in H2 (which should easily be achieved), this means a minimum fully franked dividend of 30c for the full year based on a 60% payout ratio. Its also important to remember that given no FY dividend was paid, net cash balances at the half year should be strong (I'm expecting about $20m or more based on then achieving the low end of guidance)

So no news can be good news and the dividend comments above are based on the worst case outcome. If they meet guidance, full year FF dividends will be closer to 35c (or higher if they generate a H2 profit).