# FRI - Finbar Group



## mccollr (4 May 2010)

Anyone have any thoughts or comments on this stock.

Been on my watchlist for a while. 

rod


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## robusta (2 September 2010)

Bought a piece of FRI today.
No debt, good ROE, great growth prospects, long history of good capital management. Steep discount to intrinsic value.
I value it at $1.80. Good dividend as well, looking to hold this one long term.


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## mccollr (3 September 2010)

Thanks for that summary. Similar to what my research is saying.  I got in last month as a long term hold.

Rod


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## robusta (4 September 2010)

mccollr said:


> Thanks for that summary. Similar to what my research is saying.  I got in last month as a long term hold.
> 
> Rod




Yes I wouldnt even look at this one short term - not much liquidity. However very happy to put in the bottom drawer and collect dividends and capital gains.


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## ChrisV80 (13 September 2010)

I'm with you guys, I get an intrinsic value of around $1.90 with that growing by about 13% next year.. I think I might buy for long term as well.

With the current share price hovering around $1.00 if it takes a while to catch up it will still be a nice gain, plus the 7% fully franked dividend will do me fine in the meantime.

Anyone else with a view on Finbar? any feedback would be appreciated.


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## mccollr (14 September 2010)

Finbar Group lifted revenues 179.4% to $155.0
million for the year to 30 June 2010. Net profit was
24.7% higher at $23,561,832 (14.5 cents per share). As
previously reported, the final dividend of 5.5 cents will
raise the annual rate 7.1% to 7.5 cents.
The net operating cash surplus was $65.0 million -
compared with a deficit of $46.5 million in 2009 - but
those figures just reflect the timing of investments in
projects and their final settlement.
The company currently has interest bearing debts of
only $77.2 million - and cash of $41.5 million - but that will
change as it commences new projects with an end value
of $615 million.
Finbar Group expects to complete and settle 275
residential apartments at the Edge and Times Two over
the current year with profits at “similar levels” to 2010.
It is also looking “to achieve further earnings growth in
the 2012 financial year”.


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## awg (14 September 2010)

You guys got any additional sources of info, other than the Company website?

FRI comes up high-ranked on many fundamental scans, however the lack of trading liquidity issue dissuaded me from further research.

Checking there webiste shows a nice simple business model with good short to medium prospects


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## robusta (14 September 2010)

awg said:


> You guys got any additional sources of info, other than the Company website?
> 
> FRI comes up high-ranked on many fundamental scans, however the lack of trading liquidity issue dissuaded me from further research.
> 
> Checking there webiste shows a nice simple business model with good short to medium prospects




Not sure where you can find additional sources of info but the annual report is pretty comprehesive.

If you are thinking short to medium term prospects (I agree they are pretty positive), I would keep on looking for another stock. Any bad news may burn you due to the lack of liquidity.

If you were thinking long term I cant find many better looking companies. FRI is in my opinion very undervalued and the intrinsic value is rising at a satasfactory rate for at least the next couple of years.


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## robusta (6 December 2010)

Finbar in trading halt today pending announcement of Capital Raising by Bell Potter Securities.

I think all current projects are funded so probably an announcement of a new project is also in the wings.

The last time this happened was in March along with new project in Karratha.

The thing that annoys me is capital raising will probably be restricted to intitutions and sophisticated investors.


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## ParleVouFrancois (6 December 2010)

Offsetting the lack of participation, the project would have to be pretty impressive re: the financials of it for management to dilute for it.


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## robusta (6 December 2010)

ParleVouFrancois said:


> Offsetting the lack of participation, the project would have to be pretty impressive re: the financials of it for management to dilute for it.




Thankyou. In light of Finbar Groups long history of good capital management I should probably take the glass half full point of view.

If FRI issues x ammount of shares (last time it was ~20 mil) at ~ $1.15 - $1.20 per share it will dilute my holding but raise the equity per share. If this is to fund a new project and that project returns a satisfactory ROE then things should work out OK. Will have to wait and see.


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## ParleVouFrancois (6 December 2010)

I guess I'll extrapolate my view a bit more, I don't hold FRI but they look decent, my view on this CR is similar to some of the N American oilers listed on the ASX (AUT and SEA) both had recent capital raisings to sophisticated and institutional investors. It took me a while to realise that CR's can be very positive for a small company (as opposed to something of a last resort, which is more common with larger companies in the ASX 100/200):

AUT had there's at $1.25 and SEA had it at $0.51, both very recent (within a month or two) and both are now trading a fair bit above the raising price, imo it's because the rate of return on equity in these companies will be north of 50% p.a. if the cash is deployed in building a well, thus the market will rerate them as long as the rate of return remains that high (related to the price of oil) and as long as the capital can be deployed (only a certain amount of acres). 

So applying the same sort of logic to FRI, as long as the return on equity remains high as it has been, and the capital can be deployed, and a few other factors willing (e.g. the sophisticated + institutes don't sell out for a small % profit) FRI's intrinsic worth should be boosted by the recent raisings, and although you don't get to participate (which would've made it a double whammy of positive), at least the shares you're currently holding should increase in value, this along with the now well funded company, should trigger a small rerating in FRI (obviously needs one because you're in it Robusta, good value to be found here eh? ).


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## robusta (6 December 2010)

ParleVouFrancois said:


> I guess I'll extrapolate my view a bit more, I don't hold FRI but they look decent, my view on this CR is similar to some of the N American oilers listed on the ASX (AUT and SEA) both had recent capital raisings to sophisticated and institutional investors. It took me a while to realise that CR's can be very positive for a small company (as opposed to something of a last resort, which is more common with larger companies in the ASX 100/200):




I could not agree more, it is hard to believe how many companies in the ASX200 have such poor cashflows.



ParleVouFrancois said:


> AUT had there's at $1.25 and SEA had it at $0.51, both very recent (within a month or two) and both are now trading a fair bit above the raising price, imo it's because the rate of return on equity in these companies will be north of 50% p.a. if the cash is deployed in building a well, thus the market will rerate them as long as the rate of return remains that high (related to the price of oil) and as long as the capital can be deployed (only a certain amount of acres).
> 
> So applying the same sort of logic to FRI, as long as the return on equity remains high as it has been, and the capital can be deployed, and a few other factors willing (e.g. the sophisticated + institutes don't sell out for a small % profit) FRI's intrinsic worth should be boosted by the recent raisings, and although you don't get to participate (which would've made it a double whammy of positive), at least the shares you're currently holding should increase in value, this along with the now well funded company, should trigger a small rerating in FRI (obviously needs one because you're in it Robusta, good value to be found here eh? ).).




That is interesting I have never thought about it that way. As long as the rate of return on the new equity is satisfactory and they can continue to reinvest about half the profits at about the same return plus the new capital FRI will come to the attention of more investors.

I would still love to be involved in the capital raising however, I think FRI is worth ~ $1.90.


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## robusta (9 December 2010)

Well now I have my answer.

"Finbar plans to step up development activity on iss Karratha project and continue to bolster its Perth project pipeline following the completion on a $28.67 million placement and confirmation of a fully underwritten $13.94M share purchase plan.

The spp will be at $1.15 up to a maximum of $15,000 per shareholder.

Happy days


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## ParleVouFrancois (9 December 2010)

There you go Rob, I've given you a new way to look at the CR (positive even if you don't get to participate), and for the icing on the cake they'll let you in on the deal .


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## ROE (10 December 2010)

robusta said:


> Well now I have my answer.
> 
> "Finbar plans to step up development activity on iss Karratha project and continue to bolster its Perth project pipeline following the completion on a $28.67 million placement and confirmation of a fully underwritten $13.94M share purchase plan.
> 
> ...




That is a bit naughty of them

I hold 100 shares and I can buy $15000 more regardless of my holding

haven't they learn the Stephen Mayne trick 

I don't have any by the way but good luck hope you do well


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## Intrinsic Value (10 December 2010)

I bought in at 1.05 five months back. 

I think it looks pretty good if you like the story in WA which is where I am located.


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## So_Cynical (10 December 2010)

Finbar made my next entry short list today...easy to see the SP rallying away after the SSP is settled, lots to like about a simple business model like Finbar's, still have to say im a little weary of WA property as its still very soft.


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## robusta (13 December 2010)

So_Cynical said:


> Finbar made my next entry short list today...easy to see the SP rallying away after the SSP is settled, lots to like about a simple business model like Finbar's, still have to say im a little weary of WA property as its still very soft.




WA property prices have been very soft for a few years, in this enviroment FRI have recorded three consecutive years of record profits.

Finbar are the number one apartment developer in WA, until now concentrating on Perth and surrounding suburbs. The WA gov estimate the need for approx 328,000 new homes by 2031 and have mandated 47% (~154,000) to be infill, medium to high density.

This capital raising and SPP is to facilitate the fast tracking of the Karratha "Pelago" development that will have approx end value of $225,000,000. Finbar have stated this is start of a long term focus on the Pilbara.

"Karratha is an administrative centre of resources activity and a town which is experiencing an inability of new housing supply to keep up with accomodation demands"

A quick look at real estate prices in Karratha will reveal standard suburban 3 bedroom houses selling for $800,000+ and yielding $1000+ per week rent.

As with any investment there are risk's (interest rates, housing bubble...) so please DYOR.

I may still participate in the SPP @ $1.15 but today I picked up a nice little parcel of shares @ $1.13 - Happy Days


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## So_Cynical (13 December 2010)

robusta said:


> WA property prices have been very soft for a few years, in this enviroment FRI have recorded three consecutive years of record profits.
> 
> Finbar are the number one apartment developer in WA, until now concentrating on Perth and surrounding suburbs. The WA gov estimate the need for approx 328,000 new homes by 2031 and have mandated 47% (~154,000) to be infill, medium to high density.
> 
> ...




That fact that i have money to go into a new position and i didn't have a buy order in the FIN cue today speaks volumes about my uncertainty's with this company...i had a good look at them over the weekend and like alot of stocks favoured by value investors, i came away thinking they have a high ROE because they don't actually own anything.

They have a staff of 8 and get fees from doing RE deals mostly with JV partners, all the debt is at project level but there's no real recurring cash flow...they have to keep churning over the deals and developments.

Perth is a small city and there's only so many apartments that can realistically be built...15 minutes drive from Perth airport and your driving pass cows in paddocks...there's alot of undeveloped land in Perth but no one wants to live more than 40 minutes from the beach.

And there's only so many Sand-groper's willing to pay $800.000 for a unit.


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## robusta (13 December 2010)

So_Cynical said:


> That fact that i have money to go into a new position and i didn't have a buy order in the FIN cue today speaks volumes about my uncertainty's with this company...i had a good look at them over the weekend and like alot of stocks favoured by value investors, i came away thinking they have a high ROE because they don't actually own anything.




I see this as a positive, no expensive plant or equiptment, just the ability to allocate capital for a high return



So_Cynical said:


> They have a staff of 8 and get fees from doing RE deals mostly with JV partners, all the debt is at project level but there's no real recurring cash flow...they have to keep churning over the deals and developments.




Too right they have been doing this for 26 years and have a heap of deals on the horizon for the future.



So_Cynical said:


> Perth is a small city and there's only so many apartments that can realistically be built...15 minutes drive from Perth airport and your driving pass cows in paddocks...there's alot of undeveloped land in Perth but no one wants to live more than 40 minutes from the beach.
> 
> And there's only so many Sand-groper's willing to pay $800.000 for a unit.




IMO WA is where the major growth for Australia is, the reserve bank is jacking up interest rates to cool the rest of the economy so we have some spare capacity to deploy for the projected resources boom. A lot of people will move to Perth for employment opportunities but that is only part of the story for Finbar. The Pilbarra is where the real money is to be made. Just look up positions vacant in the mining industry and realestate prices in Karratha or Dampier.


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## prawn_86 (13 December 2010)

I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.

I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.


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## robusta (13 December 2010)

prawn_86 said:


> I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.
> 
> I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.




Have to agree with you there Prawn, I think China, India and the rest of the world will be buying the stuff we dig up for a while yet.


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## So_Cynical (13 December 2010)

robusta said:


> I think China, India and the rest of the world will be buying the stuff we dig up for a while yet.




I also agree...the thing is with Karratha etc is that the jobs have been there for over 30 years, when i was a kid growing up in Fremantle is was the same then as it is now...every body wants to go north for the big bucks except today there's alot more people and alot more bucks.

My point is...no one actually wants to live there, for the 5 or 6 months of winter its a paradise, perfect weather etc then for the summer months its a hell hole...there's no amenity's, no culture, prices are over inflated and its the middle of no where....everyone wants to do FIFO and live in Perth and Bunbury, and there wife's will refuse to live there anyway. 

______________

Besides i really feel uncomfortable putting money into a business that doesn't own anything...i could never be a true "value" investor as i like assets and income way to much...FIN will stay on my watchlist but i have a feeling it will be one of those stocks i watch and think about occasionally but never buy.


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## robusta (17 January 2011)

Just a question for any traders out there. I thought I might sell part of my FRI holdings @$1.195 as I have the option to buy more @ $1.15 thought this might be a good arbitrage opportunity. 

Trying to work out who would be buying 2 shares at a time 

17 Jan 2011 13:02:Instruction: New Sell 9020 FRI @ $1.195 

17 Jan 2011 13:03:Trade: Sold 2 FRI @ $1.195 

17 Jan 2011 13:11:Trade: Sold 2 FRI @ $1.195 

17 Jan 2011 13:17:Trade: Sold 2 FRI @ $1.195 

17 Jan 2011 13:20:Trade: Sold 2 FRI @ $1.195 

17 Jan 2011 13:37:Trade: Sold 1500 FRI @ $1.195 

17 Jan 2011 13:48:Trade: Sold 2 FRI @ $1.195 

17 Jan 2011 13:48:Trade: Sold 4500 FRI @ $1.195


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## skc (17 January 2011)

robusta said:


> Just a question for any traders out there. I thought I might sell part of my FRI holdings @$1.195 as I have the option to buy more @ $1.15 thought this might be a good arbitrage opportunity.
> 
> Trying to work out who would be buying 2 shares at a time




Just some bots doing some buying/selling. Happens all the time with many stocks. Obviously they don't pay retail broker per transaction of those 2 shares.

Any ideas why FRI went from $1.50 to $1.20 since Oct?


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## robusta (17 January 2011)

skc said:


> Just some bots doing some buying/selling. Happens all the time with many stocks. Obviously they don't pay retail broker per transaction of those 2 shares.




Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?




skc said:


> Any ideas why FRI went from $1.50 to $1.20 since Oct?




Spp @ $1.15 to fast track development in Pilbarra and take advantage of opportunities in Perth.


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## skc (17 January 2011)

robusta said:


> Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?




I am no expert in bots and what the presence of them means. But even I can use my Interactive broker account to buy shares in small parcels over the course of a day in order to acheve a better price, esp if they stock is quite thin like Fri. They are definitely not uncommon.



robusta said:


> Spp @ $1.15 to fast track development in Pilbarra and take advantage of opportunities in Perth.




By the time the cap raising was announced the share price has already fallen to current levels... any better explanation?


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## robusta (17 January 2011)

skc said:


> By the time the cap raising was announced the share price has already fallen to current levels... any better explanation?




The cap raising was at a 12.6% discount to average 5 trading days prior to spp. This is a fair bit below $1.50 however. I have no real plausible explanation except maybe rising interest rates.

Or maybe more people subscribe to this opinion than mine



prawn_86 said:


> I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.
> 
> I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.




...............at the moment.

I still think this is a top quality company trading at a significant discount to iv. I am happy with the fall in the sp and the spp @ $1.15 as it has given me a chance to top up my holdings.


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## ROE (17 January 2011)

robusta said:


> Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?
> 
> 
> 
> ...




A bit of price manipulation by someone to try and maintain  above 1.15 support level for capital raising ... Imagine it goes below 1.15 no-one would take up equity raising....

this sort of things happen often in small cap...for 2 reasons someone want to drive price down low to generate some sort of trigger sell off so they can buy the thing cheap or they want to maintain some sort of supporting level....

that the life of small cap not much liquidity so easy to manipulate...just ignore small parcel trade anything under 10 shares is just pure manipulation...

it happen to CCP when they were around $2- $2.50 dollar mark... lot of parcel in 1-5 shares sell lower and lower price ....


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## robusta (17 January 2011)

ROE said:


> A bit of price manipulation by someone to try and maintain  above 1.15 support level for capital raising ... Imagine it goes below 1.15 no-one would take up equity raising....
> 
> this sort of things happen often in small cap...for 2 reasons someone want to drive price down low to generate some sort of trigger sell off so they can buy the thing cheap or they want to maintain some sort of supporting level....
> 
> ...




Thankyou for that ROE.

It seems it worked for them today ~250 000 shares traded between 2% and 4.5% above spp @ $1.15

Does not matter to me I sold 9020 shares today @ $1.195 and will take my full entitlement under the spp, 13043 shares @ $1.15 unless spp is oversubscribed.


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## Noddy (20 January 2011)

Holding shares in FRI.
Price is locked in a narrow band between $1.15 and $1.20.
Motivated sellers keep coming in at $1.20
Hard to see a valuation of $1.80 or $1.90 as posted on this thread.


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## robusta (20 January 2011)

Noddy said:


> View attachment 40964
> 
> 
> Holding shares in FRI.
> ...




Also holding shares in FRI
I was one of the motivated sellers @$1.195 but only because I have the option to buy $15000.00 worth of shares @ $1.15. 
This motivation will cease for a lot of shareholders when the spp closes on the 28/1
I think the company is worth ~$1.80 per share but have no idea what the share price will do in the short to medium term.

Here are a couple of interesting fluff pieces on Perth property prices.

http://www.perthnow.com.au/business...a-rp-data-report/story-e6frg2ru-1225990429472

http://www.watoday.com.au/wa-news/w...al-estate-20110117-19tur.html?from=watoday_sb


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## Noddy (20 January 2011)

Hopefully the share price will move up after 28/1.
How do you work out the share is worth around $1.80.
Are you using Value-able ?


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## robusta (20 January 2011)

Noddy said:


> Hopefully the share price will move up after 28/1.
> How do you work out the share is worth around $1.80.
> Are you using Value-able ?




Yes Roger Montgomery's valuation method. But I dont get too scientific about it, depending on the inputs used I come up with a range of $1.50 to $2.16. All I am really sure of is FRI is cheap.


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## Noddy (20 January 2011)

Have read Montgomery's book, but still sticking with DCF calculations at this stage.
Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.

DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
                                                $1.78 at 5% increase pa.  

Surprised at that actually. Bought the shares because I liked the chart, but they do seem to be good value.

Regards


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## robusta (20 January 2011)

Noddy said:


> Have read Montgomery's book, but still sticking with DCF calculations at this stage.
> Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.





Have to agree, hard to find good businesses at a discount to IV, then again if it was easy everyone would be doing it.



Noddy said:


> DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
> $1.78 at 5% increase pa.
> 
> Surprised at that actually. Bought the shares because I liked the chart, but they do seem to be good value.
> ...




Good luck


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## robusta (29 January 2011)

Finbar should have a advantage being first in line with development in Karratha.

http://www.pilbaraecho.com.au/echo/content/view/2746/63/

Happy to participate in the spp.


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## Noddy (3 February 2011)

Still motivated seller/s at $1.195, stock price still can't move above this level.
Have a DCF value $1.65 to $1.78, and intrinsic value (Montgomery) $2.00 to $2.10.
Interesting to see where the price goes.

Should be decided soon when FRI put out their trading update for the six months to December.


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## kermit345 (3 February 2011)

Noddy said:


> Have read Montgomery's book, but still sticking with DCF calculations at this stage.
> Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.
> 
> DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
> ...




I think you'll find the reason Roger's calculation method doesn't work well on those companies is their debt. I've created my own valuation spreadsheet/equation and I know that debt is definately the reason those stocks don't pass through my valuation method with any decent intrinsic values.

Rogers Equation is for the opportunity to identify and value stocks that are of the low debt and high ROE nature. Hence his equation basically excludes companies that have some form of debt because it drives his IV's lower and hence no margin of safety.

Haven't taken a look at this company personally as it didn't pass through my intial value screener, however theres some discussion about it on Roger's blog as well recently.


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## Noddy (3 February 2011)

kermit345 said:


> I think you'll find the reason Roger's calculation method doesn't work well on those companies is their debt. I've created my own valuation spreadsheet/equation and I know that debt is definately the reason those stocks don't pass through my valuation method with any decent intrinsic values.
> 
> Rogers Equation is for the opportunity to identify and value stocks that are of the low debt and high ROE nature. Hence his equation basically excludes companies that have some form of debt because it drives his IV's lower and hence no margin of safety.
> 
> Haven't taken a look at this company personally as it didn't pass through my intial value screener, however theres some discussion about it on Roger's blog as well recently.




Thanks for your reply Kermit.
On RM's blog 24/8/2010, he rates FRI as an A1 having moved up from A4 after the financial year results. According to Commsec website, FRI has neither short term or long term debt. Not being an accountant, can't check that out, so I may be missing something.
Book value is 69c, ROE 21.1%, P/O 47% which gives a value around the $2 mark, depending on which R/R is used.
Interested in your comments.


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## skc (4 February 2011)

Noddy said:


> Thanks for your reply Kermit.
> On RM's blog 24/8/2010, he rates FRI as an A1 having moved up from A4 after the financial year results. According to Commsec website, FRI has neither short term or long term debt. Not being an accountant, can't check that out, so I may be missing something.
> Book value is 69c, ROE 21.1%, P/O 47% which gives a value around the $2 mark, depending on which R/R is used.
> Interested in your comments.




Finbar is a property developer and I would say I've never seen or heard of a property developer who doesn't use debt.

Finbar's debt howerer rests in the project level. This allows them to keep a clean balance sheet at the corporate/group entity, as none of the debt has a charge of the parent company assets.

The other good conservative aspect of FRI is that all development facilities are covered by pre-sales that exceed 100% of the project debt. This means they won't build unless someone's buying the finish product.

Source from Dec 2010 company presentation.


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## Noddy (5 February 2011)

skc said:


> Finbar is a property developer and I would say I've never seen or heard of a property developer who doesn't use debt.
> 
> Finbar's debt howerer rests in the project level. This allows them to keep a clean balance sheet at the corporate/group entity, as none of the debt has a charge of the parent company assets.
> 
> ...




Thanks for the info.
Clears that up.
Was wondering how FRI set up property developments without using debt attached to their balance sheet


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## ROE (7 February 2011)

skc said:


> Finbar is a property developer and I would say I've never seen or heard of a property developer who doesn't use debt.
> 
> Finbar's debt howerer rests in the project level. This allows them to keep a clean balance sheet at the corporate/group entity, as none of the debt has a charge of the parent company assets.
> 
> ...




Do you get to see the financial standing of these projects.

this is a gold mine for mis-representation ..company has no debt what about
the project it has its hand in? any of these projects is in trouble, it cause earning problems for its parents...

Sound like Macquaries Banks arrangement ...when those satellite funds blow up kiss goodbye those earnings....

Not saying anything wrong with FRI but this sort of arrangement I dislike


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## robusta (7 February 2011)

ROE said:


> Do you get to see the financial standing of these projects.




FRI only show approx end value and estimated completion date of individual projects.



ROE said:


> this is a gold mine for mis-representation ..company has no debt what about
> the project it has its hand in? any of these projects is in trouble, it cause earning problems for its parents....




The only thing I can do is look at the short term debt and cash flow in the consolidated accounts.



ROE said:


> Sound like Macquaries Banks arrangement ...when those satellite funds blow up kiss goodbye those earnings....
> 
> Not saying anything wrong with FRI but this sort of arrangement I dislike




FRI does have a solid 21 year history of operating with this sort of arrangement, but as Buffett said
 "If past history was all there was to the game, the richest people would be librarians"


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## So_Cynical (7 February 2011)

ROE said:


> Not saying anything wrong with FRI but this sort of arrangement I dislike






robusta said:


> The only thing I can do is look at the short term debt and cash flow in the consolidated accounts.
> 
> FRI does have a solid 21 year history of operating with this sort of arrangement, but as Buffett said
> "If past history was all there was to the game, the richest people would be librarians"




FRI is one of those company's that you sort of have to believe in, trust that they wont make a mess of a big project and make good decisions in project selection and in awarding contracts, assembling a project team etc.

Its not that unusual to need belief in, and have a bit of trust in management.


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## ROE (7 February 2011)

So_Cynical said:


> FRI is one of those company's that you sort of have to believe in, trust that they wont make a mess of a big project and make good decisions in project selection and in awarding contracts, assembling a project team etc.
> 
> Its not that unusual to need belief in, and have a bit of trust in management.




It does look decent value but something about it haven't convince me to pull the trigger, knowing my luck when I don't buy stock goes up and they go crazy after I sold out  like FGE 

I will have another look this weekend


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## robusta (14 February 2011)

Having trouble seeing the gremlins in FRI half hear report that caused the sp to fall 3.9% in a rising market. 

Looks to me like capital raised will be put to work fairly quickly and the rewards will come fy 2012 and fy 2013. Is this too long term for the market?
Anyway for me I will hold and watch........


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## robusta (14 February 2011)

robusta said:


> Having trouble seeing the gremlins in FRI half hear report that caused the sp to fall 3.9% in a rising market.
> 
> Looks to me like capital raised will be put to work fairly quickly and the rewards will come fy 2012 and fy 2013. Is this too long term for the market?
> Anyway for me I will hold and watch........




Think I have found my answer.

The resent spp issued 3,423,654 shared to existing shareholders, 11,302,433 shares were issued to the underwriters (BellPotter).

Looks like BellPotter are reducing their exposure to FRI.

This does not change me longterm view of FRI. If the sp falls by 5% plus I will probably buy some more.

My attempt to take advantage of arbitrage situation (sell @ $1.195 and top up holding @ $1.15) during spp does not look so smart to me now.


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## Noddy (14 February 2011)

robusta said:


> Having trouble seeing the gremlins in FRI half hear report that caused the sp to fall 3.9% in a rising market.
> 
> Looks to me like capital raised will be put to work fairly quickly and the rewards will come fy 2012 and fy 2013. Is this too long term for the market?
> Anyway for me I will hold and watch........




Have to agree. Thought announcement was reasonable, and surprised that FRI dropped on a rising market today.
Has been a motivated seller/s for some time in this stock , and appears they are going on with it.
Will hang on for a while and see where it goes.
Think the fundamentals for the company are OK.


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## robusta (14 February 2011)

Noddy said:


> Have to agree. Thought announcement was reasonable, and surprised that FRI dropped on a rising market today.
> Has been a motivated seller/s for some time in this stock , and appears they are going on with it.
> Will hang on for a while and see where it goes.
> Think the fundamentals for the company are OK.




This next 1/2 year should be more of the same but look at the developments on the way for FY 2012 and FY 2013.


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## ROE (14 February 2011)

robusta said:


> My attempt to take advantage of arbitrage situation (sell @ $1.195 and top up holding @ $1.15) during spp does not look so smart to me now.




hindsight sell at 1.19 buy back today 

I think the market didn't like this comments 
 
"In this respect, a slow property market such as that being experienced in Western Australia presents us with a significant number of opportunities.  In the past three months, three new joint ventures have been secured.  These new projects will yield approximately 360 new apartment lots and provide a reward in earnings growth for shareholders by as early as FY2013." 

How can a slow property market be good for developer? they need it to be red hot for the people to get interested and hopefully buy those apartments.

Anyway that how I would think, something I am missing?

Have they pre-sold these 360 Apartments? if not a comment like a 360 apartments and slowing market doesn't goes together well...

Unless pre-sold and all they do is build (even then it may have execution risk)  
otherwise they counting a bird in the bush...

my 2 cents


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## ROE (14 February 2011)

robusta said:


> Think I have found my answer.
> 
> The resent spp issued 3,423,654 shared to existing shareholders, 11,302,433 shares were issued to the underwriters (BellPotter).
> 
> Looks like BellPotter are reducing their exposure to FRI.





Does this mean less than 30% of the people take up SPP?
man bell potter if they cant sell them at 1.15 a pop on the market, that was a dud deal for them...

now i see why they try to prop up the price not to go below 1.15  before SPP
something to keep in mind when you see price manipulation


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## skc (15 February 2011)

ROE said:


> Does this mean less than 30% of the people take up SPP?
> man bell potter if they cant sell them at 1.15 a pop on the market, that was a dud deal for them...
> 
> now i see why they try to prop up the price not to go below 1.15  before SPP
> something to keep in mind when you see price manipulation




Only 30% of shares took up the SPP (not 30% of shareholders) - but pretty poor response to the SPP for sure. 

Got stopped out of the trade at $1.15. Found it hard to draw fundamental valuation on the stock without taking a view on the WA property market in the next few years... so had to trade it in a semi technical fashion.


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## robusta (15 February 2011)

ROE said:


> Does this mean less than 30% of the people take up SPP?
> man bell potter if they cant sell them at 1.15 a pop on the market, that was a dud deal for them...
> 
> now i see why they try to prop up the price not to go below 1.15  before SPP
> something to keep in mind when you see price manipulation




You would think Bell Potter would have seen it coming if they were scraping the bottom of the barrel to find investors.

They just $28.67 mil shares to their own customers prior to the underwritten spp

http://www.asx.com.au/asxpdf/20101208/pdf/31vgcvlhywcwg7.pdf


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## ROE (15 February 2011)

robusta said:


> You would think Bell Potter would have seen it coming if they were scraping the bottom of the barrel to find investors.
> 
> They just $28.67 mil shares to their own customers prior to the underwritten spp
> 
> http://www.asx.com.au/asxpdf/20101208/pdf/31vgcvlhywcwg7.pdf




I guess that the risk for under-writing if it all go according to plan and fully subscribe easy cash 

if not you face the risk of holding large parcel of shares which may or may not appreciate in value and some un-happy clients if stock price dropped too far from placement 

Hope you do well and the current price is just Mr Market mood swing 
I'm watching from the side line and play devil advocate


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## robusta (16 February 2011)

ROE said:


> hindsight sell at 1.19 buy back today
> 
> I think the market didn't like this comments
> 
> ...




If you put your rose coloured glasses on and squint just right you can read this as a positive.

Slow property market = we get to buy land cheaper and dont have to compete with all those other nasty property developers.

FRI have done OK all built projects are sold (except one apartment) and current developments that have been either started construction or marketing have pre sales of ~ 64%. 

Not bad when Perth apartment prices performed the worst in Australia -5.6% in 2010.



ROE said:


> Anyway that how I would think, something I am missing?
> 
> Have they pre-sold these 360 Apartments? if not a comment like a 360 apartments and slowing market doesn't goes together well...
> 
> ...




They have not pre sold any of those 360 apartments the other 707 currently planned for the next three years, this is above the 560 currently being marketed (358 pre sold)

So any way you look at it it is a fair sized bet on the resource boom, low WA unemployment, population growth in the west and as a result a solid WA property market. 

At 8.1% of my portfolio and looking at the above risks I am happy to hold FRI.


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## Billyb (1 March 2011)

Anyone know why this stock has been traveling down for so long? Inside information?


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## So_Cynical (2 March 2011)

Billyb said:


> Anyone know why this stock has been traveling down for so long? Inside information?




Read back over the last 2 pages...all the commentary and info you need is there.


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## robusta (2 March 2011)

Billyb said:


> Anyone know why this stock has been traveling down for so long? Inside information?




This will have something to do with it.

http://www.watoday.com.au/wa-news/property-market-hits-16year-low-20110204-1agpn.html

Unit prices down 5.6% for the year.

The bottom line is property prices stabilise or increase and FRI should do OK. If the floor drops out from the WA property market FRI will battle for a few years.


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## Billyb (2 March 2011)

robusta said:


> This will have something to do with it.
> 
> http://www.watoday.com.au/wa-news/property-market-hits-16year-low-20110204-1agpn.html
> 
> ...




Thanks Robusta.


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## So_Cynical (2 March 2011)

robusta said:


> This will have something to do with it.
> 
> http://www.watoday.com.au/wa-news/property-market-hits-16year-low-20110204-1agpn.html
> 
> ...




WA real estate has been suffering for maybe 2 and a half years now...so perhaps the worst is almost over for WA. :dunno: bottom not far away? perhaps WA will be the first to recover as it was the first state to decline and stagnate.


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## robusta (4 March 2011)

As a holder allways nice to see directors buying on market:

John Chan 280,000 in the last 3 days

Darren Pateman 5049 yesterday


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## robusta (23 November 2011)

Sold FRI in March for a small loss @ $1.06, starting to get interested again, would be even more interested at ~ $0.70 / share.

Here is a pretty presentation with lots of pictures.

http://www.asx.com.au/asxpdf/20111123/pdf/422qm9lflfy99k.pdf

I do like the fact that they are retaining ownership of commercial property (the own MND head office) but they have a hell of a lot of units to sell into a volatile property market.


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## zac (23 November 2011)

robusta said:


> Sold FRI in March for a small loss @ $1.06, starting to get interested again, would be even more interested at ~ $0.70 / share.




I doubt it would get that low, but also its not bad considering even neglecting capital growth. The dividend yield is better than what a bank can offer.
Who knows if they can sustain that yield though through the recent slump.


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## ROE (23 November 2011)

lot of units goes for 1/2 mil a pop or more
sound pretty expensive in this market and the unit they sold is just contract to buy

they wont settle till they complete and a lot of thing can happen between now and 1-2 year away, people can just walk and lose the deposit and they have a lot of stock..

Don't know how much truth in this but interesting read 
http://www.theaustralian.com.au/bus...pe-creditor-mobs/story-e6frgah6-1226203357668


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## pixel (1 October 2015)

Very quiet on this thread.
Initially, I came across this stock by way of a yield analysis.
The long-term history also suggest a zone of support at current trading levels.





I am buying for a lt hold/ yield. Must stay above $1.


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## pixel (4 August 2016)

Has Finbar finally bottomed out? For a Cup&Handle pattern, the period seems a bit short, but if 80c turns out to be holding support, the upcoming dividend (4cFF next Thursday) should still make it a viable proposition. Recent news has also made good reading.




I gave up waiting for the gap to close and bought some just above it. Depending on today's progress, I may accumulate some more.


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## WRiley (30 September 2016)

​One worrying trend is its dividend payout for 2016 dropped compared to the previous two years.


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## bluekelah (1 December 2020)

Hi guys, thinking of establishing a position in this stock as they have completed apartments in Perth which should be snapped up quick now that property and business is booming in Perth. Whats with the sell down today?


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## bluekelah (5 December 2020)

haha spoke too soon next day up 10%


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## So_Cynical (7 December 2020)

FRI back to 2019 levels, been a consistent dividend payer over the years, there are worse stocks for sure, $1 would seem somewhat likely.
~


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## bluekelah (19 January 2021)

So_Cynical said:


> FRI back to 2019 levels, been a consistent dividend payer over the years, there are worse stocks for sure, $1 would seem somewhat likely.
> ~
> View attachment 115949



They report having sold 75m of their 400m plus big apartment project. So late 2021 should have stellar results start flowing out and a dividend bump back to 3 + 3c a year?


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## divs4ever (23 February 2022)

Finbar half year profit up 138% per cent to $9.6 million
 HIGHLIGHTS 
• Half year net profit $9.6 million 
• Karratha investment asset value increased $4.96 million after tax to $62.2 m 
• Interim dividend of $0.02 declared 
• $642 million in end value apartments currently under construction 
• Strong sales performance to start second half Perth 23 February 2022: Western Australia’s leading apartment development company Finbar Group Limited (ASX:FRI) (Finbar or the Company) is pleased to report a net profit after tax of $9.6 million for the first half of the 2022 financial year, an increase from $4.023 million in the previous corresponding period. 
The 2022 result was boosted by an increase in value of Finbar’s Pelago investment asset in Karratha which was completed by the Company in 2012. 
The value of its Pelago investment increased by $4.96 million after tax compared with the previous corresponding period and the $62.2 million asset remains fully leased with rental rates also increasing 9 per cent since the previous corresponding period. Finbar’s operating net profit was $4.6 million for the six months, with contributions from the sell down of the remaining completed stock at Sabina in Applecross, and Riverena in Rivervale, supplemented by the completion and the settlement of 66 units in the 128 unit Dianella Apartments development during the reporting period. 
Construction at two major projects, AT238 in the Perth CBD and Civic Heart in South Perth, continues to progress with AT238 expected to be completed in the first half of FY23 and Civic Heart in FY24. Construction at Aurora commenced recently with earthworks currently underway and practical completion also estimated to occur in FY24. Finbar launched The Point, an apartment project in Rivervale, during the first half of the 2022 financial year and has reported pre-sales of 87 apartments, valued at $48.4 million in the $99 million project.
With AT238 expected to reach completion in September this year, the transfer of construction resources will move to The Point where earthworks are scheduled to commence in March. 
Construction at the landmark Civic Heart project in South Perth has reached level 1 of the above ground podium with work continuing on the four-level podium before commencement of both residential tower cores. 
Finbar Managing Director Darren Pateman said the result was pleasing considering the challenging trading conditions with the greatest challenge being supply chain disruptions to the building industry, including constraints in building contractor labour brought about by almost 700 days of WA’s strict COVID border policies. “I do however see this improving after 3 March as the State moves to relax these policies,” Mr Pateman added. Finbar is benefiting from being in position to develop product and deliver it into the market at a time when some competitors are struggling to commence projects with constraints on supplies and a reduced pool of viable construction contractors. “The mere fact that we can commence construction on projects with fewer pre-sales than our competitors means that we also have stock that can be progressively repriced during construction, which helps insulate our margins in an inflationary market for both the value of apartments and building costs,” Mr Pateman said. “It is a major competitive advantage for us in the current market, being well funded and able to launch and commence projects with our cashflows and with the support of our longstanding joint venture investment partners and bankers.” Sales in the first two months of 2022 had been strong, with 57 sales worth $33.5 million being achieved across all projects, Mr Pateman said. “The Housing Industry of Australia estimates more than 10,000 apartments, that have either been proposed or approved, have been deferred indefinitely in WA, and Finbar has been able to continue to deliver quality apartments into this increasingly constrained market and one where population growth is expected to increase from 20,000 to 30,000 per annum over the next year after borders re-open.”

 The Company declared an interim dividend of $0.02 per share, unchanged from the first half of FY2021. 

 DYOR

 i hold FRI ( currently down 43% ) ( bought in July 2013 )

 another patience tester 

 i probably would have 'averaged down  'on this  , but i still see a property bubble that needs to pop


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## bluekelah (24 February 2022)

divs4ever said:


> Finbar half year profit up 138% per cent to $9.6 million
> HIGHLIGHTS
> • Half year net profit $9.6 million
> • Karratha investment asset value increased $4.96 million after tax to $62.2 m
> ...



Sorry to hear you probably bought in at the highs. Also shows how important a 10% stop loss type strategy could be useful when buying into a company near its peaks 

Hmm my mistake thinking it would go up soon,  If you look at Perth, commodities were booming in late 2011 into early 2012 before commodities and the property prices there corrected. Finbar still went up in 2013 and further peaked in 2014 (i guess a 1 to 2 year delay in pricing in the boom time projects started and presold in 2011/2012?)

i guess we will have to wait till 2023 and 2024 to see the spike in profits as the major projects get completed? Following this logic It would seem earnings should peak in 2024, followed by bumper bonus dividends, which would be a good time to sell and book in profits. That   means now could still be a good time to accumulate.


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## divs4ever (24 February 2022)

wasn't the best time to buy  , for sure  , but was holding back until the property ( finance ) scene became clearer

 these property prices are going to have to rationalize eventually

 i haven't given up on the idea of adding more  but am tempted to see if McGowan  fails to be re-elected  first

 besides i have done OK elsewhere in REITs ( MGR , BWP and SCP  come straight to mind   but there are some other solid ones  for me , like SGP )


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