A2B - A2B Australia

[Knobby22]

This years AR will give a pretty good insight into the real impact of the changes in the industry, its been long enough in Vic and NSW to see pretty well full flow through, still need to extrapolate numbers for the effect of Qld.

Every time I read through all the negative posts about CAB I get nervous, then I go back and look at my analysis and they still look good value to me! I am going to run the rule over them very carefully this year and make a decision whether to stay invested or find another home for the capital!

Cab is on a long term down trend. Look at 5 year graph. There are better choices.

 

[ROE]

I still have them on and off, bit of trading in and out and a bit of hold for dividend.

probably not the best stock I have but overall it not too bad with the current strategy.

Unfortunately, cheap money is still here so the competitor still has access to funding running at a loss.

Last report gocatch is in trouble and required further funding else they won't last past next FY.

Uber cash burn rate still high and their revenue is no longer growing and their valuation now comes off a bit.

They have been beaten in China as investors are nervous about the
amount of money they burned. The model still unprofitable and investors now asking the hard question, when will they turn a profit now that they have done with growing the market and revenue.

That my little up with what is happening, good luck to whatever you decide to do

 

[galumay]

Cab is on a long term down trend. Look at 5 year graph. There are better choices.

I have no interest in historical price movements, or graphs of same. It doesn't inform me as an investor.

None the less, there may be better choices!

On the other hand, it may be better to stay invested in CAB.

Its possible to find arguments for each alternative.

 

[Knobby22]

I have no interest in historical price movements, or graphs of same. It doesn't inform me as an investor.

None the less, there may be better choices!

On the other hand, it may be better to stay invested in CAB.

Its possible to find arguments for each alternative.

I invest also and I can't see your argument for staying in. How is Cab going to stay relevant in this Uber future. Where is the growth? There is certainly a higher level of risk.
i think long term trends (and by long term at least 2 years) are important to investors. Maybe an assumption is wrong. Compare CAB with CCP of which I own quite a few. You can see where the growth is coming from and the long term chart confirms it.

 

[So_Cynical]

I have no interest in historical price movements, or graphs of same. It doesn't inform me as an investor.

None the less, there may be better choices!

On the other hand, it may be better to stay invested in CAB.

Its possible to find arguments for each alternative.

The industry has been disrupted, Kodak went under even though they invented digital photography FFS, CAB has to reinvent its self completely to come out on top, thats a 10000 to 1 shot at best.

Incumbents hang on and change slowly, reluctantly...old dogs can learn new tricks but mostly they dont...do you want your money in a new dog or an old dog?

 

[Klogg]

do you want your money in a new dog or an old dog?

Given Uber's valuation and the amount of cash they're bleeding, the old dog is likely the better investment.

 

[poverty]

Given Uber's valuation and the amount of cash they're bleeding, the old dog is likely the better investment.

Uber doesn't need to make money in order to make CAB worthless with it. Neither of these dogs is likely a good investment, never mind which one is better. CAB's ripoff monopoly that gauged consumers for decades doesn't leave me much pity for them either.

 

[galumay]

Uber doesn't need to make money in order to make CAB worthless with it. Neither of these dogs is likely a good investment, never mind which one is better. CAB's ripoff monopoly that gauged consumers for decades doesn't leave me much pity for them either.

Beware of your emotional responses over ruling logic, most businesses can be portrayed as 'gouging consumers' - thats pretty well a pre-requisite for profit. Banks do it, supermarkets do it, mining companies, utilities, insurers.. virtually ever business in every sector has been accused of it by someone, sometime.

CAB may or may not be a good investment at current prices, but its probably wise to analyse any potential investment on the facts rather than the emotions.

 

[ROE]

I dont think CAB is worthless by any stretch even if Uber and other ride-sharing company are successful
there is an opportunity here for trade and dividend.

they have bus division and other payment development for third party that may carry reasonable value.

at some stage thing will settle down with taxi and ride sharing co-exist, until then it hard to value it but
you can use volatility to your advantage

 

[ROE]

Given Uber's valuation and the amount of cash they're bleeding, the old dog is likely the better investment.

rough calculation Uber is way over value even if they are profitable
ride sharing or taxi market is probably around 100bn a year world wide.

say Uber capture 20% of that whole market and that is huge and generous that bring it to 20bn a year in transaction
say they cut a fee of 20% that bring to 4bn in fee, say they have 30% net profit margin that brings it to say 1.2bn profit at 65bn odd value there is no room to move.

that is the very very bull case, this is where thing can go against them, at that margin more people will join the game.

people will find out they works for peanuts once they factor in all the cost of running their own car and independent contractor, some will leave and some new players will join at at some stage it even out and they can no longer grow or worse they lose more driver than they acquire and have to up incentives and that burned more cash.

Taxi market is very local and as they get into new market they face stiff competition and the larger the market the more cash they burned.

They have to reduce 20% and offer incentives in new market and they may not win
China case they pretty much lost and sell out to rival and take a join venture.

I can’t see them having this sort of valuation for long, more around 10bn mark if they are profitable and if they listed it will be a target of a shorter.

Another 5-10 years of cash burned and I think backer will have enough, anything that cant turn profit in 10-15 years are broken model.

so as long as CAB chucking a long at lower profit for another 5-10 years, most of these guys will be broke.

Here are the latest stats on Uber will they ever become profitable?

"In the first quarter of this year, Uber lost about $US520 million ($682 million) before interest, taxes, depreciation and amortisation, according to people familiar with the matter. In the second quarter the losses significantly exceeded $US750 million, including a roughly $US100 million shortfall in the US, those people said. That means Uber's losses in the first half of 2016 totalled at least $US1.27 billion.?"

 

[Klogg]

they have bus division and other payment development for third party that may carry reasonable value.

CDC is a dog of a business... not really worth much.

 

[McLovin]

CDC is a dog of a business... not really worth much.

CDC is hopeless, and I don't know why CAB keep throwing money at it. CAB tries to sell themselves as a payments business, but direct so much of that cash into a capital heavy, low return business like buses. Getting out of the CdC biz makes total sense, imo. It's also worth noting it barely rates a mention in the prezo.

An interesting observation, imo, is that in the states where there is a LfL comparison without a price cap change (Qld and Victoria) fares processed went down. In Queensland they blamed it on mining (but WA went up?!?!), but Victoria's economy is doing fine at the moment. I guess we should expect a spike in Qld in the next year and a fall in NSW.

 

[Klogg]

CDC is hopeless, and I don't know why CAB keep throwing money at it. CAB tries to sell themselves as a payments business, but direct so much of that cash into a capital heavy, low return business like buses. Getting out of the CdC biz makes total sense, imo. It's also worth noting it barely rates a mention in the prezo.

You actually have to dig through the notes of their annual report to get a clear picture of it (unless I missed it?). Given CDC is listed as a $252m asset, surely they should focus on it.
I guess the fact that it returned ~6% (14.5m PAT on ~252m) on the investment is probably why they don't... What makes it even worse is the cost of debt is 3.7%. Surely they realize additional investment here is destroying shareholder capital (unless the COC applied to equity is also quite low).

 

[McLovin]

I give the bus thing 12 months, as in they will get rid of it. It starts to get interesting under a scenario of them selling their bus investment. Public transport companies seem to trade on abot 15-23x earnings. Comfortdelgro is on 22x itself. At that price, CAB's share in the JV is worth pretty much the entire value of CAB, leaving the payment and taxi service biz for free.

Well it ended up taking 14 months.

 

[pixel]

I can see a potential drop back to $3.10, but at a grossed-up divi of $1.29, even that would leave quite a bit of beer money. Disappointed that I hadn't seen this early today, but buying even now.

 

[skc]

I can see a potential drop back to $3.10, but at a grossed-up divi of $1.29, even that would leave quite a bit of beer money. Disappointed that I hadn't seen this early today, but buying even now.

It's 90c dividend fully franked and you only get the benefits of the franking if you hold >45 days or have less than $5k in franking credit to claim for the financial year. So make sure you don't count the gross up dividend without satisfying the ATO rules.

Chart looks like it ants to break $4... and ex-div is not until 30 March so plenty of time for the price to move before the actual dividend drop off occur.

 

[pixel]

Chart looks like it ants to break $4... and ex-div is not until 30 March so plenty of time for the price to move before the actual dividend drop off occur.

no sooner said than done

Friday's Close came out at $4.08, at which price the dividend will still yield 31.5% for the HALF year. As regards the franking rights, you are correct about the 45 day rule and $5000 threshold. I wrote the program with the assumption that users don't have to be told the Rules.

 

[galumay]

at which price the dividend will still yield 31.5% for the HALF year

Isnt that just about meaningless though? CAB is not going to be able to be sold for anything like $4 after it goes ex div.

I sold out earlier in the year - and in hindsight it was a terrible error of timing because I could have got much nearer $4 had I held on until they announced the special divvy - and in that case I would have made a real gain, but if you buy it for $4, get the divvies and sell afterwards you might be only breakeven.

 

[pixel]

Isnt that just about meaningless though? CAB is not going to be able to be sold for anything like $4 after it goes ex div.

I sold out earlier in the year - and in hindsight it was a terrible error of timing because I could have got much nearer $4 had I held on until they announced the special divvy - and in that case I would have made a real gain, but if you buy it for $4, get the divvies and sell afterwards you might be only breakeven.

Of course I'm not counting on reaping the full 30%+. I use my program to alert me early enough to participate in the buy-up into ex-div. It then depends on trading patterns (and a bit of experience) to decide whether to sell before ex, or stay on and collect the dividend.
That aside, it's only one strategy that helps earning a living.

 

[galumay]

Ok, i guess if you buy at significantly less than $4 then there is a reasonable chance that you can make a good capital gain prior to it going ex div and if you hold it and collect the div then the divvies plus the price when you sell should see some level of profit.

The real winners would be the long term holders that bought in years ago at a sub $2 price, whether they sell before it goes ex div or after, its a great opportunity to exit a business which is slowly dying, with great returns.