Forum Archive Index - March 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Ben,

> 
>I only just read that Domino's are looking at entering the NZ market
>- check out this story:
> 
>http://www.sharechat.co.nz/news/scnews/article.php/f03495e2
> 
>Because you're the RBD expert on the Forum, I'd like to ask you a
>couple of questions (hope you don't mind!).
> 
>According to the Access Brokerage website, at the closing price of
>$1.25 today, RBD's dividend yield is 14.9% and it's P/E is a measly
>5.23.
>

That 14.9% yield, while historically accurate, is a bit misleading
Ben.  Dividend payouts have been 8cps on 29th May 2002 and 4.5cps on
22nd November 2002.

Strictly this gives a yield of [(4.5 + 8.0)/0.66]/125= 15.0%

However that 8c per share in May was based on more than a twelve month
period due to the change in end of year balance date last year. 
 Actual expected dividend in May 2003 should be 5.5c, which gives a
yield of:

[(4.5 + 5.5)/0.66]/125= 12.0%

Still attractive, but perhaps not quite the super yield bargain you
thought.  Nevertheless at this price you are getting the Australian
expansion for nothing, even if some on this forum would have you
believe it is worth just that (isn't that so MacDunk)!   Still the
fact that Australia is not yet profitable is no surprise and has been
well signalled.

For the twelve months ended February 2002 earnings per share were
22.3c.  This gives an historic P/E of 125/22.3= 5.6

>
> 
> Do you think the market has overreacted to the Dominos news and, if
> so, what's your analysis of RBD at this price?  Does the share
> scream value, or not?
> 

RBD is the share that everyone wants to like.  If things go according
to Colliers grand plan then RBD is a screaming bargain at $1.25 IMO.  

However, RBD has a record of patchy profit growth, so much as I'd like
to rank it super highly I think you would have to consider it a yield
investment only until there are a few years of profit growth on the
slate.  The earliest RBD can qualify for membership to our elite club
of focus investment group companies, for example, is FY2004.  Even
then they must have profit growth both this year and next to do it.

>
> (No RBD, but thinking...)
> 
>

With a yield of 12% and banks term deposits paying under half that, it
does make you think doesn't it?

SNOOPY

discl: hold RBD



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