Finance > Shares
Companies I didnt buy
galumay:
HSN is another company I have looked at in the past, thought they were over valued in 2015 at around $1.80 and bought DWS instead, looked at them again this week, very rough range of value around $2.60 currently $2.90.
The biggest issue is that they dont seem to be creating any organic growth, so totally reliant on roll ups to create growth. CROIC is quite high at 15% but you would expect that with a capital light software business.
A pass for me.
galumay:
GLB & HIT are 2 i had on watch list.
ended up buying both and doing well
galumay:
As at March 2019, 14 businesses I analysed and researched to the point of considering taking a position, and chose not to. Of them 3 would have made me money, 1 of which was taken over, only 2 would have made meaningful returns. 10 would have made a loss. 1 break even.
galumay:
SKT Sky NZ, $1.16. I think it is worth nearer $2.50 on current earnings and cash flow at a quick glance, but a fair bit of debt and consistently falling earnings put me off. A definite potential contrarian turn around play.
CROIC is not bad either, above 10%.
What would earnings have to drop to for $1 something to be fair value? My guess is under 10c EPS, thats a significant amount less than current earnings, in fact its half the guidance for 2019.
Its hard to see a near future where SKT isnt a viable business in NZ, they have 40% penatration and while the Netflixs of the world will eat away at their margins and revenue with a high quality and real NBN, as long as they have the rights for sports they will survive. So what are the odds of sport going to streaming? Well I dont think its happened on a national scale anywhere in the world so far, but it could happen.
The Rugby world cup should give them a bump in revenue for first half 2020, NZ is such a rugby mad country and the World cup is in Japan in October.
The market hated the impairment writedown last year, and I would imagine there are more of them to come, so that is a potential negative,
On the upside a price of $2.50 is not a stretch if they meet guidance, so probalistically, maybe a 10% chance of sport moving totally to streaming seeing a collapse of the business , 10% * 0 =0 plus a 20% chance they meet guidance & impair again, 20% * $1 = 20c plus a 60% chance they meet guidance, no impairment and market rerates - 60% * $2 = $1.20 and 10% chance they exceed and market rewards 10% * $2.50 = 25c for a total expectancy of $1.65
- which is a reasonable return.
Trouble is this sort of calculation is so wooly, I could easily modify, 10% * 0, 50% * $1.20 (no change) , 20% * $2, 10% * $2.50 for a total of $1.25 - about where it is now.
galumay:
EOS
Makes military hardware and also positioned for space expansion. Biggest negative was discovvering Fred Bart was Chairman, I saw his work at Audio Pixels and thats enough to put me off! Also huge gap between reported NPAT & FCF, book a profit, no sign of cash flow.
3/5/19 $3.30
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