The range of scenarios covers it pretty well I think and the...

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counterpuncher

52 Posts.

14/05/17

09:36

Post #: 24675099
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Originally posted by Mpacman ↑

Thanks for you input. Here is my back-of-the-envelope input.

Optimistic valuation $3+: Management pulls a rabbit out of the hat, successfully negotiation a beneficial mutual outcome with no further margin compression and maintaining existing store network, emphasis on growth through focus on Telstra business centres with the possibility of further store acquisitions, extension of masters license agreement beyond 2020.

Fair valuation ~$2: Further margin compression with same number of stores along with license extension beyond 2020. Emphasizing capital return to shareholders via dividends and buybacks instead of seeking external growth.

Pessimistic valuation $(I won't go there): Margin compression and losing stores via the reshuffling of retail network due to Telstra retail clustering strategy, uncertainty regarding Masters license extension beyond 2020 with management saying we don't know wait and see, anxious management expanding into something disastrous for the sake of diversification and growth.

I did not use my made up "Telstra uncertainty risk premium" under scenario based valuation as the cash flows in the scenarios already reflect the uncertainty. Including it is kind of double counting.

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The range of scenarios covers it pretty well I think and the resulting valuations seem reasonable for those scenarios. Just thinking..........could there also be a plausible takeover scenario in which someone buys out VTG? I haven't looked back through all the posts. Thanks

VTG Price at posting: $1.55 Sentiment: Buy Disclosure: Held
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0 Great analysis

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