# SIQ - Smartgroup Corporation



## ROE (2 July 2014)

Smartgroup, collectively Smartgroup Corporation Ltd and its 
subsidiaries, consists of a group of businesses offering salary 
packaging (comprising salary packaging administration and 
novated leasing) and fleet management services to employers 
and their employees in Australia.

http://smartgroup.com.au/

Smart Salary 
Manages  outsourced salary packaging administration of over 110,000 
employees (Employee Customers) for their employers (Employer Clients)

Seqoya
Specialist salary packaging software licensed to Employer Clients to 
manage salary packaging in house


PBI Solution
Provider of marketing and administrative services for Employee Benefit Cards 
on behalf of an Australian bank

Smart Leasing
Transactional services for motor vehicle novated leases, finance and other 
associated vehicle products under a salary packaging arrangement 

Smart Fleet
Fleet management services provided through a web-based fleet management system and a 
comprehensive suite of vehicle management services


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## VSntchr (2 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*

Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.


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## ROE (2 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



VSntchr said:


> Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.




I think now they know the regulative risk, they will try and diversified the business away from FBT dependent business and hopefully by the time it comes it wont do too much damage ... I think Smartgroup already trying becomes a brokers for products they can get their hand one ..stuff like this


https://smartdiscounts.rewardgateway.com.au/


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## skc (2 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



VSntchr said:


> Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.




Interestingly, SG Fleet is the other recently listed company in the same space. It crashed on debut but has almost recovered back to the $1.85 issue price. 

IMO the listing of 2 similar businesses after the PBT scare was no coincidence... and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.


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## VSntchr (4 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



skc said:


> and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.




That's a thought provoking point, one that reminds me of portfolio theory back at uni!


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## KnowThePast (16 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



skc said:


> Interestingly, SG Fleet is the other recently listed company in the same space. It crashed on debut but has almost recovered back to the $1.85 issue price.
> 
> IMO the listing of 2 similar businesses after the PBT scare was no coincidence... and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.




Hi skc,

On one hand, yes, one could think that owners may want to see out as they suspect it can happen again in a few years time.

On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?


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## skc (16 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



KnowThePast said:


> Hi skc,
> 
> On one hand, yes, one could think that owners may want to see out as they suspect it can happen again in a few years time.
> 
> On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?




No listing doesn't take that long. It can be done in about 20 weeks according to the ASX website.

http://www.asx.com.au/listings/listing-capital-raising/listing-process.htm


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## McLovin (16 July 2014)

*Re: SIQ - Smartgroup Corporation Ltd*



KnowThePast said:


> On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?




Yes, well under a year. IB's were sounding out companies last year which is where the current torrent of floats comes from. I know two different companies that are involved in the IPO process at the moment. One started in about March the other in about June. Both will _probably_ float by October.


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## Klogg (10 October 2014)

Taking a look at the most recent half-year results and I'm a little confused by "A2 - Significant Items".
Entire section posted below:



> On July 2 2014, Smartgroup Corporation Ltd (formerly Smartgroup Investments Ltd) undertook an initial public offering on the Australian Stock Exchange. In the half year ended 30 June 2014, the Group incurred qualifying transaction costs of $2,467,000 in anticipation of the issurance of orginary shares under the initial public offering. The qualifying transaction costs have been measured as being the portion ofthe transaction costs that relate to the issue of new shares under the initial public offering.
> 
> The Group has elected to defer the qualifying transaction costs of $1,727,000, net of income tax, on the balance sheet as at 30 June 2014 until the shares are issued on the date of the Initial public offering. The deferred costs will be subsequently reclassified as a deduction from equity when the shares are recognised as required under AASB 132. The cash outflows that relate to these qualifying transaction costs has been recofnised as a Cashflow from financing activities in the Conslidated statement of cash flows.
> 
> The Group has also incurred several transction costs which are not considered to be qualifying assets. These have been classified as Transaction costs in profit and loss for the half year ended 30 June 2014, a total of $10,636,000. The portion of cash outflows that relate to other expenses incurred in relation to the initial public offering have been classified as Cashflow from operating activities in the Consolidated statement of cash flows.



(Apologies if there are spelling errors, I had to type it all)

My understanding of this is:
- $2.467m of costs were incurred for issuing new shares alone
- Of this, $1.727m will be deferred until the new shares are shown on the balance sheet (i.e. next set of financials) and deducted from shareholder equity.
- $10.636m additional costs, not related to issuing new shares were incurred in this transaction. This is expensed in this set of financials and shown under "Transaction Costs" on the Income statement.

What I'm unsure of is:
- Given only $1.727m of share issuance costs are being deferred, when is the remaining $740k ($2.467m - $1.727m) being expensed? (I can't find it on the income statement)
- What is the typical cost of an IPO for a company of similar size? 

I understand this hasn't been listed very long, so I don't know if anyone is looking at it. Nevertheless, any help (specifically on the first question) would be greatly appreciated.

In the meantime, I'm on the hunt for IPOs of a similar size and the costs incurred.

Thanks

EDIT: Found a PWC document that gives a range of IPO costs based on Gross Proceeds:
http://www.google.com.au/url?sa=t&r...G3mTJrRhyRjA9JJKaSE-zSg&bvm=bv.77161500,d.cGU


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## Klogg (26 February 2015)

Well, after my insane ramblings about IPO costs, I took a fair holding at  ~$1.27. If only I could say I meant to time it so well...

The report is very positive, and the 70% payout ratio implies a FF dividend of 12.2cps, or 7.9% fully franked, if earnings remain flat. 

That said, I do still have this nagging voice in my head reminding me of the potential FBT changes to car leasing...


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## ROE (26 February 2015)

Nice, I package with these guys and their IT and forms are top, that should help drive efficiency in processing.

There virtual no need to contact them, filled in the form and email all done right every time.


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## peter2 (13 April 2015)

*SIQ*: I like the trade opportunity. I can't call it a break-out, but price is back at an older level (1.60) after a genuine BO failure.
Good news popped the price higher late Feb. but it has drifted down to fill the gap and now looks like it's ready to move up. 

Knowing nothing of the company, I read that it's into salary packaging. Seems to me that there's a few others in this space (incl a new listing ECX).


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## Klogg (11 June 2015)

ROE said:


> Nice, I package with these guys and their IT and forms are top, that should help drive efficiency in processing.
> 
> There virtual no need to contact them, filled in the form and email all done right every time.




@ROE - Do you know the date of expiration of the Dept of Defence contract? 
I'm not too concerned about them losing it, as management have loaded up on stock - but it's always better to remove any doubt.


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## ROE (17 June 2015)

Klogg said:


> @ROE - Do you know the date of expiration of the Dept of Defence contract?
> I'm not too concerned about them losing it, as management have loaded up on stock - but it's always better to remove any doubt.




Just out defence renew for another 6 years...stocked jump 16%.
I package with them and very happy, efficient and very fast.. I am not surprise many resign


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## Klogg (17 June 2015)

ROE said:


> Just out defence renew for another 6 years...stocked jump 16%.
> I package with them and very happy, efficient and very fast.. I am not surprise many resign




Yeah, that's great news. I somewhat expected this, given the MD's large on-market purchases somewhat recently.
Great result


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## ROE (27 August 2015)

cracker result, nice cash flow, margin expansion, win more clients, good dividend and take over possibility with AP Eager creeping up on the register in the background should keep this stock trading at a premium


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## Klogg (27 August 2015)

ROE said:


> cracker result, nice cash flow, margin expansion, win more clients, good dividend and take over possibility with AP Eager creeping up on the register in the background should keep this stock trading at a premium




It's not even trading at a premium. If 1H profit is annualised, it's trading at about 11-12* earnings.

Compare it to MMS and SGF and it's relatively cheap (granted MMS is larger, less single client risk).


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## ROE (27 August 2015)

Klogg said:


> It's not even trading at a premium. If 1H profit is annualised, it's trading at about 11-12* earnings.
> 
> Compare it to MMS and SGF and it's relatively cheap (granted MMS is larger, less single client risk).




look like AP Eager has to sit on the register for a bit longer  cos they need to pay some serious premium for this baby


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## efoyzer (1 September 2015)

Hi All 


Are the directors doing a defensive buy up to protect against a buy out? or cashing in to cash out???

Interesting buys over the past few days!!


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## Klogg (14 December 2015)

Given the run this has had, and the underlying regulatory risk (IMO somewhat heightened as a result of falling government revenues), I couldn't hold it any longer. Sold it today.

That said, the management team are really delivering, so this may cost me.


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## piggybank (9 May 2016)

Since the last posting, the stock had been going sideways, but the past week as seen the price break higher with today's close being nearly 30% higher than this time last week.


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## Muschu (12 May 2016)

Don't hold but could be ready to break out?


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## Muschu (18 August 2016)

Ended up buying a small parcel and today got a share offer in mail. Haven't had time to study yet. 
Any views to share?


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## Kryzz (18 May 2018)

Muschu said:


> Ended up buying a small parcel and today got a share offer in mail. Haven't had time to study yet.
> Any views to share?




Hope you're still holding Muschu. Cracker of a trend on this one. Pushing all time highs again. 

Monthly chart posted. Short interest is <1%, recent dips seem to be well supported. Recent capital raising seems to have been taken favourably.

https://www.fnarena.com/index.php/2018/03/15/smartgroup-on-the-road-to-acquisition/

https://www.asx.com.au/asxpdf/20180221/pdf/43rsjc75nrl1hg.pdf


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## Mikado (13 August 2018)

Anyone know whats causing ongoing price weakness?
Other than more sellers than buyers!


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## Miner (2 April 2019)

I have to confess that Smart Group is really smart.
SIQ has a piece of big news coming for sure when a director sells 1,1 million shares. Of course to meet some emergency financial needs and tax obligations and still has 2.95 million shares. I will not question what strategic moves Mr Billimoria has to reduce stake by about 25 %?

https://www.asx.com.au/asxpdf/20190402/pdf/44400mkhw1xyfp.pdf 

as published today on ASX.

Of course, SOL had no calculation when they also reduced their holding a few days back

https://www.asx.com.au/asxpdf/20190319/pdf/443mbw7v1m0cn8.pdf
Disclosure - DNH any more.


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## Trav. (7 July 2019)

SIQ having a good run this FY, all green bars so far!

Also pays a pretty good dividend if you are looking at longer term. Div + Growth


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## greggles (19 August 2019)

SIQ up 21.7% to $11 today on no news. Anyone have any idea what's going on?


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## peter2 (19 August 2019)

1/2 year results and dividend news were released after the market closed Friday.


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## greggles (19 August 2019)

peter2 said:


> 1/2 year results and dividend news were released after the market closed Friday.




Thanks Peter. I should have looked more closely. Here's a snapshot for those interested.


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## bigdog (18 November 2019)

Down 15% after today's ASX announcement attached
18/11/2019 8:20:06 AM  Change of CEO and Earnings Update

No doubt the loss of the CEO!

“Under Deven’s leadership, Smartgroup has evolved from a start-up into a successful and respected ASX-200 company with an experienced management team administering approximately 350,000 salary packages and more than 66,000 novated leases under management.

Smartgroup announced that its managing director and chief executive officer, Deven Billimoria, intends to retire from the role.

Mr Billimoria will leave the company at the end of February 2020 after the release of its FY 2019 full year results. The chief executive has been with Smartgroup for over 19 years and in the top job since 2002.











don't hold

84


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## peter2 (18 November 2019)

Interesting. Price jumped higher after SIG reported a 5% increase in profits (Aug19). Price now falls heavily after long term CEO resigns. Profit guidance for full year remains the same. Is there a reasonable reversal opportunity here?


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## greggles (29 September 2021)

Looks like Smartgroup Corporation is about to be taken over by TPG Global, LLC and Potential Capital at $10.35 per share. No opinion about the deal as I'm not too familiar with SIQ so will leave any comments to others.


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## Country Lad (29 September 2021)

greggles said:


> Looks like Smartgroup Corporation is about to be taken over by TPG Global, LLC and Potential Capital at $10.35 per share. No opinion about the deal as I'm not too familiar with SIQ so will leave any comments to others.



I own these and on a number of occasions I have considered selling (fortunately I didn't) because I was questioning whether it is worth the price even before the offer.  The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most certainly is of the view that there will not be a better offer to follow.


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## Faramir (29 September 2021)

If @ROE still read this forum, if someone did a MMS vs SIQ, why would SIQ be a better buy six years ago. If I had money back then, maybe I would have own both of them. Instead I own MMS and I couldn’t tell you why I own McMillan Shakespeare MMS. I was lucky that I sold MMS at profit.


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## aus_trader (30 September 2021)

Country Lad said:


> I own these and on a number of occasions I have considered selling (fortunately I didn't) because I was questioning whether it is worth the price even before the offer.  The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most certainly is of the view that there will not be a better offer to follow.



Or could it be that the announcement was made on a day when all markets including ours was having a big sell off and bidders weren't keen to push the price right up to the Scheme proposal price...


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## Country Lad (25 October 2021)

Country Lad said:


> I own these and on a number of occasions I have considered selling (fortunately I didn't) because I was questioning whether it is worth the price even before the offer.  The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most certainly is of the view that there will not be a better offer to follow.



The way the price was slowly receding  and the fact that TPG has a history of fishing and then pulling out or reducing the offer, I became more and more sceptical. Fortunately, I sold on the 14th at $9.46.  Not as good as straight after the offer, but as expected TPG pulled out of the original proposal today and made a lower offer.

Note to self, if TPG involved in an offer, sell.


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## aus_trader (25 October 2021)

Country Lad said:


> The way the price was slowly receding  and the fact that TPG has a history of fishing and then pulling out or reducing the offer, I became more and more sceptical. Fortunately, I sold on the 14th at $9.46.  Not as good as straight after the offer, but as expected TPG pulled out of the original proposal today and made a lower offer.
> 
> Note to self, if TPG involved in an offer, sell.



Well done Country Lad, certainly nice to sell out near the top.

Would have been even better of you to have shared the TPG Global sneaky business with fellow ASF members who are shareholders who might feel a little SIQ after seeing this...






Oh well, let's keep TPG hot offers in the shifty basket from now on...


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## Country Lad (25 October 2021)

aus_trader said:


> Well done Country Lad, certainly nice to sell out near the top.
> 
> Would have been even better of you to have shared the TPG Global sneaky business with fellow ASF members who are shareholders who might feel a little SIQ after seeing this...




I am sure most of the shareholders would have been aware of it and it was also the subject of a Livewire article which appeared in the Iress list of SIQ market announcements.  The fact that I have a personal dislike of TPG doesn't mean I should try to influence others who may have had the same view as Montgomery in the Livewire article and wanted to hang on.  Also, the fact that Aware Super was involved should have given it a greater chance of success. My reason for selling was a personal assessment of the risk.

*Smartgroup Corporation (ASX: SIQ)*​_*James Marlay: *Staying with you, Simon. Smartgroup - the yield was looking a lot more attractive at the beginning of September. It's subsequently received a bid and the share price has jumped nearly $2. Are you a buy, hold or sell on Smartgroup? 

*Simon Conn (SELL): *Controversially, I am a seller of this business because we have seen TPG and many other private equity firms approach companies and then not proceed with the bids. So this is an approach by TPG. It's conditional and non-binding. And so I think there are questions around whether they execute that. And look, we own *SG Fleet (ASX: SGF) *in the fleet leasing market. It's trading on 15 times and has a 4.5% yield. We much prefer that business - it's better value and I think really well-positioned going forward with its technology platform that they are putting in place to improve their service offering for their customers. 

*James: *Roger, Smartgroup. Is it a buy, hold or sell for you? 
_
_*Roger Montgomery (BUY):* I am going to stick my neck on the block and go the opposite way to Simon. I think it's a buy. It is under takeover as Simon mentioned. I am always interested in what we call post-announcement arbitrage opportunities. And there is still a 12% gap here. I actually think this deal proceeds. In fact, I think the strength of the initial bid, being granted exclusivity, and Aware Super indicating that they will participate in the proposal as an equity co-investor shows the intent to complete. But that's just my view. The discount exists because a few deals have recently fallen over, as Simon mentioned. I think this is a simpler business, it's got a cleaner balance sheet. There is always a risk that a deal as highly conditional as this one doesn't complete, but I back this one going through, so it's a buy._


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## frugal.rock (25 October 2021)

Up until around 6 ? years ago or so, I and wife  were  customers of TPG for mobile phone and internet.
At the time, they were using Optus as their carrier.
With little notice, they changed carriers and used Vodafone instead.
Service became woeful in our area and in general also elsewhere that you would expect reasonable service...
Our mobile phones were confirmed to be fine to work on Optus bands not Vodafone.

Good way to lose customers TPG....


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## Dona Ferentes (25 October 2021)

frugal.rock said:


> Up until around 6 ? years ago or so, I and wife  were  customers of TPG for mobile phone and internet.
> At the time, they were using Optus as their carrier.
> With little notice, they changed carriers and used Vodafone instead.
> Service became woeful in our area and in general also elsewhere that you would expect reasonable service...
> ...



wrong TPG

this is Private Equity. 


> TPG is a global investment firm with $108 billion in assets under management. We are headquartered in Fort Worth, Texas, with senior executives based both in Fort Worth and in San Francisco, California, and other principal offices in New York and across Asia, Australia and Europe


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## frugal.rock (25 October 2021)

Dona Ferentes said:


> wrong TPG
> 
> this is Private Equity.



Thanks Dona.
I meant TPG... i think is Total Peripherals Group.
Phone and internet mostly.
My bad. Please ignore.
🤡


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## aus_trader (25 October 2021)

frugal.rock said:


> Thanks Dona.
> I meant TPG... i think is Total Peripherals Group.
> Phone and internet mostly.
> My bad. Please ignore.
> 🤡



Not to worry @frugal.rock it's easy to mix up TPG Telecom Ltd (asx: TPG) with TPG Global Private Equity vultures.


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## aus_trader (25 October 2021)

Country Lad said:


> I am sure most of the shareholders would have been aware of it and it was also the subject of a Livewire article which appeared in the Iress list of SIQ market announcements.  The fact that I have a personal dislike of TPG doesn't mean I should try to influence others who may have had the same view as Montgomery in the Livewire article and wanted to hang on.  Also, the fact that Aware Super was involved should have given it a greater chance of success. My reason for selling was a personal assessment of the risk.
> 
> *Smartgroup Corporation (ASX: SIQ)*​_*James Marlay: *Staying with you, Simon. Smartgroup - the yield was looking a lot more attractive at the beginning of September. It's subsequently received a bid and the share price has jumped nearly $2. Are you a buy, hold or sell on Smartgroup?
> 
> ...



You are right @Country Lad , if a well respected analyst like Roger Montgomery couldn't predict correctly which way this would go, it's quite possible that it could have gone the other way as well and got bid up with higher offers especially when a Super fund is in favour of the deal.

It's actually trading at a heavy discount to the current offer, so could even go higher.


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## Country Lad (26 October 2021)

aus_trader said:


> It's actually trading at a heavy discount to the current offer, so could even go higher.




or maybe we are back to where we started where I said 

_         The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most 
         certainly is of the view that there will not be a better offer to follow._

I am not in the least tempted.


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## aus_trader (26 October 2021)

Country Lad said:


> or maybe we are back to where we started where I said
> 
> _         The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most
> certainly is of the view that there will not be a better offer to follow._
> ...



Looks like you've had the predictions right from the start on this one @Country Lad  

SIQ is pretty much back to pre-Takeover price now...


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## finicky (9 June 2022)

@divs4ever your kind of company? In addition to lavish dividends it mostly delivers high ROE (I get median 21%) on a rising trend of book value. Seems low capital intensity. Looks pretty close to fair value to me - definitely one more for my crash list.

Dividend History:


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## finicky (19 June 2022)

Now significantly lower @ 6.20
Last week announced loss of a client and downgraded 1H 22 EBITDA guidance.

Not Held


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## finicky (20 June 2022)

Down another 5-6% today.
I don't understand to any meaningful extent the workings of salary packaging, novated leasing and whatever else they do but it's been pretty profitable since listing. The lowest ROE years were still 17%, the rest were low 20s%. The shares issued are nice and low.  They've delivered heaps of dividends. All that's worth at least 3x book value to me and it now just under 3x.
How will this sort of business be affected by a deep recession though, since it rests on employment? Macmillan's (MMS) share price has been plunging too - company of the same species. They don't seem to have a 'moat' since when I googled 'novated' I came across a very descriptive online version: novatedleasing.com.au

Not Held


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## finicky (26 August 2022)

Back to 6 bucks, down 12% early in trading but the June Half Qtrly just announced doesn't seem too bad.
They have disclosed headwinds in wage inflation, client slowness due to interest rates and tight supply of vehicles.
Normal dividend which must be about 6% full year? Doubt I'll buy though due to other interests.

Not Held


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