Valuation / Fundamentals

I thought i would start a new thread to discuss the valuation and fundamentals of this business. This will also serve as an edit to my previous posts re: valuation.

On the valuation side, my historical valuations are:

FY14 - $0.63
FY15 - $1.10
FY16 - $1.46

FY16 is the first year i feel that this company's price represents a discount to intrinsic value. I do have to say that the FY16 valuation may change when the annual report comes out to confirm forcasts but i think the $1.40 mark is reasonble at this stage.

My major concern with this company is operating cashflow and management (in particular dividend policy and the DRP). This company is burning through cash as cashflow from operations is not enough to fund the loans they make. As such they borrow and raise capital. Considering this, i dont think that paying a dividend is in the best interests of shareholds. If they dont have enough cash to fund the operations, it is not prudent to pay a dividend. They should be using the money for loans. As i have stated in a previous post the ROE is better than the div yield anyway.

Also, considering the DRP it makes the dividend seem even sillier. Not enough cash, but they pay a dividend and then ask for the money back through a DRP anyway. Whats the point? Just keep the cash in the first place instead of giving it to us and asking for it back.

Im very interested to hear everyone elses thoughts on the valuation and the fundamentals.

As always DYOR.