A2B - A2B Australia

[hiddencow]

The market sentiment on CAB seems to have turned around quite a bit.
Price has run up without any new economic news except for the associate figures which had a slightly negative impact on release.

Results out this Thursday, won't get the full impact of the taxi reforms yet though so we might have to wait until 2015. Hopefully, in that time organic growth of taxi use and card usage will offset the lower fee percentage somewhat.

I got in at 3.70 a few months earlier, it's certainly not cheap anymore with the risks hanging over it. I'm hoping after all the reform effects are passed and known, CAB can regain it's premium status and multiple, much in the same way Telstra has.

 

[goccipgp]

CAB has an ongoing P/E of 9.43 according to au stoxline, which indicates that it is still undervalued. Would like to see a break above 5.00.

 

[galumay]

CAB has an ongoing P/E of 9.43 according to au stoxline, which indicates that it is still undervalued. Would like to see a break above 5.00.

Personally I wouldn't use P/E as an indicator of value, and I think its getting close to IV unless CAB can get the earnings growing again and avoid further regulatory impacts. I think the diversification is starting to help the business, although there have been a few bumps in the road this year with the loss of contracts.

I did consider selling this week, but on reflection I am going to hang in there, the dividend is up round 6.8% on my buy price so cant complain about that.

 

[prawn_86]

No comments on the recent results?

Seems to have found some support from the market with a lot of buying recently

 

[hiddencow]

Sold out the majority of my position.
$4.5million impact on revenue from just 5 months of the 5% fee in Victoria. Once it's implemented in NSW as well for a full year there is going to be a major impact on revenues and profits. Although there was higher turnover, this was no where near enough to make up for the lower %. Doesn't look like there is much growth elsewhere to compensate for the loss either.
Bus business requires a lot of capital for an ok return and the UK business still a disaster and will probably require further impairments.

The market keeps pushing it up though and at these prices, I'll take the money.

 

[piggybank]

Although the story was released on Monday, I thought some of those who hadn't seen it might like to know what's going on with Uber, especially in South Australia.

Ride-sharing company Uber is operating illegally in South Australia and its drivers should expect to be fined, the state treasurer says. The California-based company held its official Adelaide launch on Friday, with Port Adelaide captain Travis Boak and Adelaide captain Nathan van Berlo sharing its first service. Uber allows ordinary drivers to offer a ride-sharing service and the company claims a typical fare will cost less than the average Adelaide taxi.

The service is limited to licensed drivers aged at least 24, whose vehicle has at least four doors and was manufactured after 2005. But Treasurer Tom Koutsantonis says.....

https://au.news.yahoo.com/a/24801558/uber-drivers-will-be-fined-sa-govt/

 

[qldfrog]

pushing the delay a bit further but seriously CAB better carry on paying the brides (off course legal) it does to the policy makers and make hay while it can
aka sucking the suckers (us) while the sun shines
who do I trust more, a yellow cab driver or Uber;
unless you live in a different world from mine, the usual taxi driver conversation I have had for the last 5 years in Brisbane (mostly daytime for work /business meeting) has been:
I 'd like to go to......(usually within a 5km radius of CBD)
after 2 minutes wasted with at a driver trying to be on the road while typing on his gps with wrong spelling
..I will guide you if you want...
you go right//left/etc

then you have a chat :
how long have you been there?
usually between 3 weeks and 3 months, never years
Usually friendly guys by the way, horrendous driving but nice....
anecdotal sure but thinking about it probably 15 times out of 20 or so in the last year only.

So these highly checked persons have to be more trusted than Uber?
People hate taxi companies and do not trust them, feel rorted, and i never use a credit card within taxi irrespective of amount due to this total lack of trust (and you'd better check the change)
CAB has a product which has a temporary shelf life and is now in my opinion expired.
I do not own (but could for trading, not for investing)
DYOR and yeollow cab was just example, I used both yellow and B&W

 

[prawn_86]

Interesting to note that 2 Singaporean based funds are increasing their holdings. Aberdeen Asia now owns >15% and FIL has just ticked over the 5% mark, so 20% held between them.

What are they seeing that everyone here isn't?

 

[galumay]

Interesting to note that 2 Singaporean based funds are increasing their holdings. Aberdeen Asia now owns >15% and FIL has just ticked over the 5% mark, so 20% held between them.

What are they seeing that everyone here isn't?

Well not everyone! I am happy to continue to hold. I think a lot of the negative sentiment here and elsewhere is emotionally driven. I am more focussed on the actual business and its financials.

 

[VSntchr]

CAB has a product which has a temporary shelf life and is now in my opinion expired.
I do not own (but could for trading, not for investing)
DYOR and yeollow cab was just example, I used both yellow and B&W

You know, this is quite a common theme on ASF and elsewhere..and I don't completely disagree.
I get annoyed if I go to pay for fuel at (I think its Caltex??) and they charge me 1.5%....now 10% is just a smack in the face !

I have never really looked deep enough into CAB to understand exactly how they make their money. I know it is from the 10% (or 5% in some states?) surcharge on Credit Card payments..but what exactly justifies the charge? Is it merely the fact that they have an exclusive agreement with the Cab companies to facilitate the CC terminals that are used? Do they provide any other 'service'? Do they provide the Cab companies with any other assets or service?
Hoping that a holder can save me the effort of reading a few more reports to find out!

 

[ROE]

You know, this is quite a common theme on ASF and elsewhere..and I don't completely disagree.
I get annoyed if I go to pay for fuel at (I think its Caltex??) and they charge me 1.5%....now 10% is just a smack in the face !

I have never really looked deep enough into CAB to understand exactly how they make their money. I know it is from the 10% (or 5% in some states?) surcharge on Credit Card payments..but what exactly justifies the charge? Is it merely the fact that they have an exclusive agreement with the Cab companies to facilitate the CC terminals that are used? Do they provide any other 'service'? Do they provide the Cab companies with any other assets or service?
Hoping that a holder can save me the effort of reading a few more reports to find out!

They make a lot of money from payment but they are more than just a payment company ....their grip on
the taxi infrastructure enable them to do this....other don't have the same grip so they cant make the same money as CAB.

Market doesn't agree up until now but with their hooks in the industry, I say they are nearly unbreakable
monopoly, other payer can comes up with competing products but unless you have CAB iron grip on the infrastructure it nearly impossible for anyone to break their grip.

They do taxi finance, insurance, driver training, radio network, bus transport, one of the best EFT solution provider (some banks outsource their work to CAB for this)

There are more to CAB than meet the eye but the scary headline usually scarier than the reality

the 5% charge maybe blessing in disguise as you need even more volume to be profitable and only CAB has the volume most other players will slowly bleed and dies.

plenty of stories on smaller players trying to steal other player customers with dirty tricks to make up volume all play nicely in CAB hand ....

 

[ROE]

I have never really looked deep enough into CAB to understand exactly how they make their money. I know it is from the 10% (or 5% in some states?) surcharge on Credit Card payments..but what exactly justifies the charge?

they take 5% on total bill, say your trip cost $100, CAB charge you $105 if you paid with credit card or cabcharge
anything but cash, you have an option to pay cash $100 and it cost you nothing extra.

CAB provide all the payment terminal in the Taxi mostly free of charge and develop EFT solution to process
these payment, they also wear the risk of default, taxi driver always get pay, all these upfront capital CAB has to fund and they recoup via the 5% surcharge

it cost a lot of money initially but as time goes on they have the advantage of charging the same but spend less
on their network, so the argument they arent allow to do this is a bit rich, just because they successful fund
and create a taxi payment network that make them money.

what if that investment didn't pay off? who pay? people has the option of paying cash and don't face the surcharge so people do have a choice, pay cash or pay with card.

and that is also their competitive advantages, anyone want to get into this game, has to fund the initial large capital cost with CAB at the door, you can try and steal CAB customers but CAB can hit you back with a bleeding noise by matching your payment or better and slowly bleed you.

they have the financial strength to bleed you where the new player cant.

 

[TikoMike]

Interesting to note that 2 Singaporean based funds are increasing their holdings. Aberdeen Asia now owns >15% and FIL has just ticked over the 5% mark, so 20% held between them.

What are they seeing that everyone here isn't?

No disrespect, but you need to re-read the thread buddy.

Also Fidelity do their homework pretty thoroughly, it wouldn't surprise me if they had a long talk with Andrew Skelton.

 

[Smurf1976]

anyone want to get into this game, has to fund the initial large capital cost with CAB at the door

CAB has an effective monopoly on what could be considered a utility-like services. Practically every city in the world has taxis, and in Australia's case CAB has a monopoly on non-cash payment in a society that increasingly prefers to pay by non-cash means.

I can foresee a situation where government mandates that CAB allows rivals to use their infrastructure for a fee in much the same way as Telstra (for example) has to allow competitors access to its' communications network. Needless to say, the fee charged to competitors would be set by government regulation, not by CAB. Other natural monopoly industries have been down this track already so it's not a new idea.

The biggest risk I see with CAB is political. If you have a monopoly then sooner or later government takes in interest and that's especially so in an industry (taxis) which is already more heavily regulated than most.

 

[galumay]

CAB has an effective monopoly on what could be considered a utility-like services. Practically every city in the world has taxis, and in Australia's case CAB has a monopoly on non-cash payment in a society that increasingly prefers to pay by non-cash means.

I can foresee a situation where government mandates that CAB allows rivals to use their infrastructure for a fee in much the same way as Telstra (for example) has to allow competitors access to its' communications network. Needless to say, the fee charged to competitors would be set by government regulation, not by CAB. Other natural monopoly industries have been down this track already so it's not a new idea.

The biggest risk I see with CAB is political. If you have a monopoly then sooner or later government takes in interest and that's especially so in an industry (taxis) which is already more heavily regulated than most.

Maybe that could happen, although I am not sure the Telstra analogy is a good one. It was OUR infrastructure, owned by the taxpayers, then by slight of hand the government of the day stole our infrastructure and then sold it back to us by floating Telstra! Then the government had to regulate to allow access to our infrastructure by other companies to break a rorting monopoly.

In the case of CAB i think there are some legislative risks, although as ROE has pointed out they may actually play into CAB's hands, any monopoly is much less obvious than the sense that telstra held a monopoly over our telecommunications infrastructure.

 

[ROE]

There is nothing stopping other players building a similar infrastructure to CAB, in fact there are player doing that already GM cabs, and dozen of other smaller and apps player...whether you are profitable or not is another story.

Just like Coke distribution network, you can start up a new soft drink that may taste better than
coke and build the distribution network to supplies them to all corners of Australia, whether you are
profitable or not is another story.

I call CAB monopoly but technically they are not because you can pay with cash
but they have system that mirror a monopoly without being a monopoly if I can explain it right

where as TLS in Australia, there is no alternative to use the copper line, I cant just run a plastic cable to my house and use it for the phone ... but CAB you do have a choice, cash, no one force you to pay with plastic card.

I guess I can call Coke distribution network a monopoly too because no one can replicate its distribution network without spending multi Billions and with that there are chance they aren't make a cent profit so effectively coke distribution network that is a near unbreakable monopoly.

 

[piggybank]

Hi,

I thought that this maybe of interest to those with opinions (good or bad) about Uber. I'm not sure if you have to join up in order to read the thread which is 99 pages long

Here is the link:- http://forums.whirlpool.net.au/forum-replies.cfm?t=2253674&p=99

Regards
PB

 

[McLovin]

Hi,

I thought that this maybe of interest to those with opinions (good or bad) about Uber. I'm not sure if you have to join up in order to read the thread which is 99 pages long

Here is the link:- http://forums.whirlpool.net.au/forum-replies.cfm?t=2253674&p=99

Regards
PB

That discussion seems to be about UberX, not Uber. Interestingly, I was passing through LA last week and apparently California has come up with a new set of regulations to deal with ride sharing type services which addresses things like insurance. This is how I see Uber playing it in Australia. Once people have a taste of something it's very hard for a politician to take it away (unless they want to lose their job) so instead they will regulate it. That seems to be Uber's disruptive model to force regulatory change. Pretty much every large city in the world has a resident Cabcharge and they're all complaining.

 

[TPI]

Re: CAB - Cabcharge Australian

Anyone know what proportion of CAB's revenue and/or earnings come from payments as opposed to other services like taxi finance, taxi insurance etc.?

Will new methods of payment like using iPhones threaten CAB's infrastructure?

Will the EFTPOS machine become obsolete if payments can be made for free with an iPhone app?

Chequebooks, coins, notes, credit/debt cards a thing of the past?

Just playing devil's advocate here, not owning CAB at present.

 

[Smurf1976]

Re: CAB - Cabcharge Australian

Chequebooks, coins, notes, credit/debt cards a thing of the past?

Ask someone under 30 about cheques and they'll assume you mean a bank cheque or one issued by a large business or government department. Those are the only people who can issue cheques, right? Personal cheques are already pretty much finished - an entire generation has basically never used them.