A2B - A2B Australia

[Sean K]

Management could probably take a few tips on how to finesse government a bit better too. They always seem to come off as abrasive and arrogant, much like a former CEO of Telstra. The government can make your life very difficult.

When anyone has a monopoly, this is the result. Whether it is the political will, or the social will.

 

[ROE]

The reform will be a good thing...get it out ...close the chapter...and let start planning business around it...hire and

fire the people need to do the job...Reg wont be around for much longer so I say time to bring in some new blood

maybe a short term hit to earning but long term I think CAB will be right....

 

[banco]

One of the worst companies in Australia in terms of regulatory capture and rent seeking. Looks like one state has finally broken free.

 

[Knobby22]

Some support today to just below $4.00.
Long term earnings are going to drop. I therefore think it will stabilise sub $4 then drop during the reporting season to $3.50. Might be good value at that stage.

 

[DJG]

I jump in with another 4000 shares during free fall to $4.00. - while people still digest and panic kicks in ...

Do you believe the core of the business is still the same even after these changes?
How do you believe the will increase profits from here?

 

[ROE]

Do you believe the core of the business is still the same even after these changes?
How do you believe the will increase profits from here?

Core of the business will still the same, earning impact of course but stock price already price for it and more...
their bus division is growing at a healthy clip and I say they could be earning 30 plus cent not far from now

Assume the worse reduce taxi earning by 50-60% not factoring in their smaller rival may not be viable with 5% charge..and they reclaim the market share... (it cost a fair bit to have the payment terminal in the taxi, without volume and 10% charge small player cant justified the upfront capital as they have no other source of revenues)...

Just like small loan sharks, with the Cap on interest rate lending they cant handle it and CCV take the whole market...

going forward CAB can still earn 30c plus worse case scenario ...healthy dividend at this price even if it was to cut by 50-60% ...not much down side in my view with the price been trading last few days ....I been buying.

now we know what the regulations and reform are, it easy to play with different scenario and CAB has certainty and they can now get on with how to tackle it ...and hopefully in time they can find their footing again and start growing again ....there are avenues for CAB to grow, it's not all doom and gloom......more taxi and easy to get taxi plate...more taxi driver training, insurance, finance and compliance ...CAB has a dipped in all those area....there are many many bus routes CAB can grow....CAB can accumulate more taxi related business...etc...

All analyst claim doom and gloom when TLS is losing the copper line and when CCV face with Cap interest rate..
Negatives news sell better I like stock price when people see there is no future for it.....it is always at its cheapest..

 

[rbgmauq]

CAB has an ongoing P/E of 7.14, which indicates that it is undervalued.

 

[Huskar]

Core of the business will still the same, earning impact of course but stock price already price for it and more...
their bus division is growing at a healthy clip and I say they could be earning 30 plus cent not far from now

Assume the worse reduce taxi earning by 50-60% not factoring in their smaller rival may not be viable with 5% charge..and they reclaim the market share... (it cost a fair bit to have the payment terminal in the taxi, without volume and 10% charge small player cant justified the upfront capital as they have no other source of revenues)...

Just like small loan sharks, with the Cap on interest rate lending they cant handle it and CCV take the whole market...

going forward CAB can still earn 30c plus worse case scenario ...healthy dividend at this price even if it was to cut by 50-60% ...not much down side in my view with the price been trading last few days ....I been buying.

now we know what the regulations and reform are, it easy to play with different scenario and CAB has certainty and they can now get on with how to tackle it ...and hopefully in time they can find their footing again and start growing again ....there are avenues for CAB to grow, it's not all doom and gloom......more taxi and easy to get taxi plate...more taxi driver training, insurance, finance and compliance ...CAB has a dipped in all those area....there are many many bus routes CAB can grow....CAB can accumulate more taxi related business...etc...

All analyst claim doom and gloom when TLS is losing the copper line and when CCV face with Cap interest rate..
Negatives news sell better I like stock price when people see there is no future for it.....it is always at its cheapest..

CAB has been sheltered for so long that management has shown little initiative and a lot of truculence. I agree that longer term these reforms look good for the taxi industry generally (in Victoria first, with other states now likely to follow). If the taxi industry benefits the main player is likely to benefit, provided management can show some nous rather than emu-like putting their head in the sand...

As you say ROE it kinda reminds me of CCV but also ORL and BRG, once their formerly cushy cash cows are forcefully removed the uncertainty is removed and the real core of the business can shine through.

I think there is value here but how long it will take for that value to be realised is another question..

 

[Knobby22]

Here comes the drop to $3.50 I mentioned. ($3.89 as I type this).
The question is should I be buying it at that stage. The yield will be very attractive. Growth prospects -not very.

 

[Knobby22]

I predicted $3.50 but it only got down to $3.75 and has popped up for air above $4.00.
I know, its the yield but I struggle to value the company as being worth this as I expect no growth.
The competition is only going to get stronger to this enterprise and the other states should follow Victoria. Risky hold imo.

 

[galumay]

CAB has steadily drifted down from around $4.50 down to under $4 in the last month. I haven't seen anything to cause this sort of fall. Its definitely moving against the market, I am happy to hold but interested to understand the negative sentiment.

 

[skc]

CAB has steadily drifted down from around $4.50 down to under $4 in the last month. I haven't seen anything to cause this sort of fall. Its definitely moving against the market, I am happy to hold but interested to understand the negative sentiment.

For a good number of years, CAB hasn't moved inline with the overall market like other industrials.

A chart of 5 years shows large share price swings (20%+) at fairly regular intervals (2-3 times a year) so it's a decent trading stock, but the overall return has been negative over this period for long term holders.

There's a recent article on AFR about new apps targeting the taxi market with backing from James Packer and other notable people. That may or may not be the explanation for the recent weakness.

The challenges facing traditional operators like Cabcharge have been highlighted by the calibre of investors now pouring money into rival tech start-ups like goCatch and Uber, which use smartphone applications to book and pay for taxis.

James Packer and SEEK co-founder Paul Bassat, two men who realised early on that on-line recruitment was going to give newspapers a run for their money, are injecting money into goCatch.

Google grabbed headlines last week with news it was investing $US258 million ($276.68 million) in Uber, although this has a lot to do with its plans to break into the self-driving car business rather than a simple bet on the power of taxi booking apps. Silicon Valley start-up Uber, which launched in Sydney in November, lets users book and track a private car using a smartphone app.

http://www.afr.com/p/business/companies/traditional_taxis_hit_by_change_DhDqV8e6Qfe2fKlpQPLOaM

 

[galumay]

For a good number of years, CAB hasn't moved inline with the overall market like other industrials.

A chart of 5 years shows large share price swings (20%+) at fairly regular intervals (2-3 times a year) so it's a decent trading stock, but the overall return has been negative over this period for long term holders.

There's a recent article on AFR about new apps targeting the taxi market with backing from James Packer and other notable people. That may or may not be the explanation for the recent weakness.



http://www.afr.com/p/business/companies/traditional_taxis_hit_by_change_DhDqV8e6Qfe2fKlpQPLOaM

Thanks SKC, I wasnt aware of its lack of synch to the overall market.

I did read the article, but I didnt really think this was likely to have effected the market, the apps have been around & others in development for quite a while. I think the effect was already seen in last years results and while they will have a place in the industry I dont think they will have much more impact on the Cabcharge business.

Anyway its a good test for me - the first stock in my portfolio to move into negative territory!

 

[TikoMike]

Despite all the negative sentiment news and one piece of negative news (VIC 5%) CAB is still a cashflow monster.

 

[Pioupiou]

I have no problem valuing CAB within the range of $3.00 to $4.00, so the $3.50 midpoint seems reasonable. This is based on a range of dividends starting at 30 cents, and either not growing, or growing very slowly (say 2.5% per year). I would highly appreciate some feedback on what basis and under what assumptions you arrived at your valuation.

 

[tinhat]

I have no problem valuing CAB within the range of $3.00 to $4.00, so the $3.50 midpoint seems reasonable. This is based on a range of dividends starting at 30 cents, and either not growing, or growing very slowly (say 2.5% per year). I would highly appreciate some feedback on what basis and under what assumptions you arrived at your valuation.

Piopiou, I read your posts with interest. Look at the chart. Look at a monthly, weekly and daily charts for this stock. It's a dog. No point chasing "value" or yield if the market thinks the stock is a dog and you have to watch the capital value of your investment go down month after month. I haven't analysed this stock from a FA point of view nor analysed the quality of the management to make the transformative changes that are probably required for this company to prosper in the long term. The charts do tell me what the market thinks of this company. If it is worth between $3 and $4 as you suggest it might be worth waiting to see the market sentiment pushing the price up rather than down before hopping on. You may think it is worth between $3 and $4 but I bet that if you hold this company you didn't buy in that price range?

Just looking very quickly at the dividend pay-out ratio and cash flow of the company this company has the potential to invest and transform as needed if it has the right management. Again, I haven't looked into this company to know. I understand they are moving into other aspects of transport; eg, public bus operations.

 

[Julia]

Piopiou, I read your posts with interest. Look at the chart. Look at a monthly, weekly and daily charts for this stock. It's a dog. No point chasing "value" or yield if the market thinks the stock is a dog and you have to watch the capital value of your investment go down month after month. I haven't analysed this stock from a FA point of view nor analysed the quality of the management to make the transformative changes that are probably required for this company to prosper in the long term. The charts do tell me what the market thinks of this company.

The above reminded me of a post many years back by Bunyip which I've always remembered because it made so much sense and turned me into a trend follower.

In mid February when the trend line was breached and the stock was making lower peaks and lower troughs, it told us that the many thousands of investors who researched this stock had found reasons to doubt that it had further upside potential.
I don't know or care what these reasons were......as a trend trader I don't need to concern myself with specific details of the reasons behind every move in a stock or market. I can't make any money out of reasons, but I can definitely make money out of trends. Therefore the most productive use of my time is to analyse trends, not the reasons behind the trends.
I couldn't care less about PE's or projected PE's or earnings forecasts or new pipeline deals or new gas discoveries or any of that stuff that you fundamentalists spend so much of your time researching. Sure the fundamentals are important and they have a big bearing on the behaviour of the stock. But why should I spend one minute of my time researching the fundamentals when thousands of you have already done the research for me. To get a summary of what your fundamental reseach has told you I can simply look at the chart.

If the consensus opinion among you is that the stock has brilliant fundamentals, chances are that you'll all be piling into it and pushing it higher and higher. And I'll just wait for a bit of a dip in the price action, then I'll climb aboard and go for a ride. At the same time I'll place a stop loss so that my worst case scenario is a small loss if the trade doesn't go as planned

If the consensus opinion of your research is that a company has awful fundamentals, (e.g. AMP a few years back) then you'll all be dumping the stock like its got the plague, causing it to downtrend. Some of the more switched on traders among you may even be selling it short or buying put options so you can profit from the declining prices.
As a trend trader I'll have many opportunities to sell the stock short each time it puts in a brief rally against the downtrend.

If your research finds that the stock has mediocre fundamentals, then chances are that you and all the other fundamentalists won't have much interest in it, and your lack of interest will be reflected by the stock drifting sideways on the chart.
As a trend trader I'll leave that stock alone because it won't interest me either - I'm only interested in those that are trending strongly either up or down.

Regardless of whether we use fundamental analysis or technical analysis, we're all trend riders by virtue of the fact that we want our stocks to trend strongly in the right direction, and we want to ride that trend at least until we make a decent profit.....we want to be trend riders.
Considering that nearly all of us want to be trend riders, it seems only logical that we should put our efforts into studying trends, rather than what causes the trends, or what might cause them in future.

By studying trends you learn......
*How to recognise them as they're beginning.
*How to guage their strength so you trade only in the strongest trends.
*How to identify simple entry setups so you can safely enter the trend.
*How to limit your loss if the trend fizzles out shortly after you enter.
*How to progressively lock in your profit as the trend moves in your favour.

And perhaps most important of all, you learn to recognise when there is no trend in place. This enables you to avoid stocks that are drifting aimlessly, going nowhere. Its these sort of stocks that tie up your capital for months at a time, costing you money not only in holding costs, but worse still, in lost opportunity costs.
Kerosam said earlier in this thread that he bought GGN for 33c on the recommendation of Fat Profits, then sat in it for 2 months before it went his way.
I'd have a lot more respect for Fat Profits if they'd recommended GGN as a buy on 28/11/05 as it came out of a pullback a couple of weeks after beginning a new uptrend.
This buy signal was, incidentally, one of the simple setups you can learn in about 10 minutes from "Dave Landry On Swing Trading", and his other book "Dave Landry's 10 Best Swing Trading Patterns And Strategies".
Buying GGN on Nov 28th at around 35 as the stock powered upward would have been a far better strategy than buying it months ealier at 33 and tying up money in a non performing stock.....money that could have been put to better use by investing it in a strong trender.
Be assured that I'm in no way meaning to criticise Kerosam here - I'm simply pointing out how simple trend analysis could have could have enabled him to avoid the pitfalls of tying up his money in a non performer for months at a time, and how it could have given him an entry at the perfect time just when the stock was taking off.
The lost opportunity cost of buying stocks that are going nowhere is enormous. In this business its critically important to have your investments performing strongly for you, and if they're not, then quit the trade and redeploy your capital in a more productive stock.
As U.S. billionaire Donald Trump said....."Limit the downside - the upside will take care of itself".

 

[galumay]

The above reminded me of a post many years back by Bunyip which I've always remembered because it made so much sense and turned me into a trend follower.

Its fascinating how we all find resonance with entirely discordand and even opposite lines of thought. I guess it speaks to the difference in psychological profiles and world views.

I have read similar explanations of FA which had a similar if opposite effect on me - confirming by belief that TA is voodoo, and shaping my system into one with a fundamental basis.

I actually found the passage you quoted amusing - the assumption that trends reflect FA, that seems so silly to me, what they reflect is nothing more and nothing less than the historical actions of an irrational market. (of which true fundamental investors are but a tiny part of)

Yet clearly the same words had a profound effect on you and shaped your investment strategy.

I guess that is one reason I find human psychology such an interesting subject!

(mind you I also am happily holding CAB too!)

 

[Shaker]

Thanks for reposting that Julia

Great read for many of us trying to buy in what are volatile stocks. The Trend is our friend.

Shaker

 

[Julia]

I
(mind you I also am happily holding CAB too!)

Well, there you go! Rather proves the point that Bunyip was making and endorses Tin Hat's view that it's a dog.
I'll hold off on the 'amusement' and wish you the best of luck with it.