VGH - Vision Group Holdings

[Ken]

My quest for picking undervalued stocks has lead me to VGH, which is in the health sector, its trading on a PE ratio of 13 compared to its peers of 22.

It's earnings per share are set to increase from 16 to 28 by 2009.

Its dividend it set to increase from 10.5 to 16.3.

Broker forecast have it as a buy. It hasn't been mentioned before, so i thought i would put it out there.

Laser surgery to me is something that is becoming more common. At $2.69 it seems one of the better valued stocks in the healthcare sector.

Any thoughts, westpac have it rated as accumulate.

Do not hold, but at the right price I think it could be a good investment.

 

[prawn_86]

i was in this not long ago for a short term trade.

i think the fundamentals are there, ageing population etc etc but i havent look at it at too much detail.

i bought in at $2.55 and sold out a couple weeks later at $3 for a nice low risk profit, but as to a long term hold im not too sure but it does show potential.

 

[Lachlan6]

Gday Ken. From a techinical perspective, (VGH) has had a tough time since its large reversal acumulation pattern in late 2005. Since then the stock has been punished, falling from the mid $4's to today's price. Signs of positive accumulation may be forming now, which may mean that the stock will drift between a wide range between $3 and around $2.3. Such signs have come from nice positive divergence with price, which arrested the savage decline, however it was unable to overcome key resistance at $3.

Unfortunately, today's action is negative as the sellers are coming back in, refilling a nice little gap up in May, but also breaking through the wrong side of a short term uptrend line. The stock is certainly not a long term BUY yet in my opinion, as I favour it drifting within the afore mentioned range for a while before it decides upon its next quest, either breaking through key resistance, or continuing lower. I have also posted on the chart my Elliott Wave count, which shows that the failed attempt at key resistance, also coincides with a key fibonacci level.

 

[Ken]

Thanks for the chart.

I am of the view, its not a buy just yet but at some point VGH will not be ignored, and it will be revalued. If the business model is putting out good results, then value will come to the share price. There are worse companies out there than VGH trading at inflated prices. It's out of favour yes, just a matter of getting in at an acceptable level. The lower the price the higher the yield.

 

[maungatapu]

Shareholders equity 118.06m includes 198.9m goodwill
shares 73.36m

Book value per share $1.61 Last sp $0.52
Strip out the goodwill they're worth zilch.

 

[So_Cynical]

Company Summary

• Market Cap: 35,744,584
• Issued Shares: 68,739,584
• 52-wk High: 3.07
• 52-wk Low: 0.41
• Last Price: 0.52
• Div-share: 0.13
• Div 100% franked
• First listed 17 Dec 2004

Shareholders equity 118.06m includes 198.9m goodwill shares 73.36m
Book value per share $1.61 Last sp $0.52
Strip out the goodwill they're worth zilch.

Who cares about goodwill...technically there worth nothing because they
own nothing, everything would be leased, and u could say the same about
any service provider.

VGH is a good little business with good revenues, a great dividend history
and very little down side.

 

[prawn_86]

Are they still planning on paying a 13c divvy? Surely not, but the question is how much will it be reduced by?

 

[So_Cynical]

Are they still planning on paying a 13c divvy? Surely not, but the question is how much will it be reduced by?

That's the big question, and its the same question for so my stocks as we approach
interim divvy declarations over the next 3 or 4 weeks, so many stocks on paper looking
to return over 10%...but that just cant happen...can it?

EDIT...just found this

VGH Chairman described Vision shares as “massively undervalued”. He says last year's
dividend payout of 13c a share - equating to a 21 per cent yield on the midday price -
remains “rock solid”. (Dec 30)

http://www.theaustralian.news.com.au/story/0,25197,24855827-23634,00.html

 

[prawn_86]

Intersting volume on this one today after the close. Insider knowledge of a t/o?

I would like to pick this one up but am being conservative at the moment (no doubt it will run now...) When is the next div due?

 

[prawn_86]

More interesting volume today and up 8%. Im very close to picking these up...

Any VSA or techies care to comment?

 

[bagasas]

More interesting volume today and up 8%. Im very close to picking these up...

Any VSA or techies care to comment?

I'm more interested in a fundamental analysis. As far as I can tell, this stock has gone down over 80% in the past year for no good reason. They might suffer a little through the recession, but if anything less than most other businesses. Maybe they were overvalued at $3, but with a P/E under 2 and a sustainable dividend yield over 20%, they are grossly undervalued. So where's the explanation?

 

[prawn_86]

I would be very surprised if they maintained their div. My bet is they will reduce it down to about an 8% yield citing a need to preserve capital...

 

[bagasas]

I would be very surprised if they maintained their div. My bet is they will reduce it down to about an 8% yield citing a need to preserve capital...

Why? Compare to Ramsay Health Care: RHC has debt/earnings of 149.5% and interest cover of 2.88, while for VGH the corresponding figures are 93.6% and 3.52. Payout ratio is a bit higher for VGH at 61% versus 55% for RHC. RHC is predicting ~10-15% EPS growth over the next three years while VGH is predicting about that amount of EPS reduction this year and then the same amount of EPS growth for the next two years (CommSec figures, FWIW). So RHC does perhaps look a bit better, but not enough to explain a P/E of 15 versus 2.4, and there would seem to be no justification for reducing the dividend as much as you suggest.

 

[prawn_86]

IMO (and this is pure speculation), they will reduce the dividend and possibly look to expand/take over other areas, or defend from a takeover.

I just have never seen a company on such a high yeild that actually pays out that much, usually they reduce the yeild because thats what every other co is doing, so they go with the crowd.

It will be interesting to see what happens. When is thier next div due?

 

[bagasas]

IMO (and this is pure speculation), they will reduce the dividend and possibly look to expand/take over other areas, or defend from a takeover.

I just have never seen a company on such a high yeild that actually pays out that much, usually they reduce the yeild because thats what every other co is doing, so they go with the crowd.

It will be interesting to see what happens. When is thier next div due?

The last dividend was payed in October, so probably the next will be around April. Remember, even though the yield looks high at current prices, most shareholders bought when the price was much higher, so they will be upset if the dividend is reduced unnecessarily.

 

[prawn_86]

Remember, even though the yield looks high at current prices, most shareholders bought when the price was much higher, so they will be upset if the dividend is reduced unnecessarily.

Fair point.

I'll def be watching closely to maybe scalp a bit of profit out of it if they do keep the full divvy

 

[knocker]

Apparently someone has made an offer for the company. There business is fairly stable, always people with cataracts bad eyes etc who need treatment.

 

[knocker]

The last dividend was payed in October, so probably the next will be around April. Remember, even though the yield looks high at current prices, most shareholders bought when the price was much higher, so they will be upset if the dividend is reduced unnecessarily.

Well bear in in mind that the primary shareholders are the surgeons themselves and an elite few who started the company

 

[So_Cynical]

When is their next div due?

There last 3 Interim ex - div dates have been the 6th 18th and 20th March.

Will be interesting to see what they do with the divy.

 

[surfingman]

Just having a look and thought i might post some parts of the info...

Total Debt: $111,386,198.00

Total Debt / Equity (Debt being the upper level)
2006
55.76%
44.24%

2007
54.10%
45.90%

2008
52.38%
47.62%


2006 ROA 1.35%
2007 ROA 3.76%
2008 ROA2.31%

2006 ROE 3.06%
2007 ROE 8.19%
2008 ROE 4.86%

The level of debt is 52.38% of its business in 08, VGH can draw up to $49,463,802 more on the current loan agreements, Return on Assets and Return on Equity have both fallen in 2008 FY Results.

Diluted EPS (Cents)
2006 EPS 16.82
2007 EPS 18.80
2008 EPS 21.38

I will also be watching this one closely, waiting for the 1H results for earnings and level of debt.... Not sure if they will release div info with results or not???