CUP - Count Limited

[prawn_86]

Re: CUP - Countplus

Fallen off a cliff last few days since announced a 30% reduction in dividend

 

[JTLP]

Re: CUP - Countplus

Fallen off a cliff last few days since announced a 30% reduction in dividend

Was it a 30% reduction in their quarterly dividend going forward or a one off?

May be worth a look...

 

[prawn_86]

Re: CUP - Countplus

Was it a 30% reduction in their quarterly dividend going forward or a one off?

May be worth a look...

Dividend reduced from an annual 12 cents to 8c for the foreseeable future so they can focus on additional growth and acquisitions

 

[jbocker]

Re: CUP - Countplus

Been a bit of a dip in the price last few days. If they keep holding their dividend payout, they will provide a good percentage return over the next 12 months.
Annual report due out soon.

 

[Cashflows]

Re: CUP - Countplus

Wouldn't be too sure of the dividend yield, it seems that if you look at the last HY reports that CUP is still cash flow negative by about $4,052,000. This is in spite of a 74% lift in operational cash flows and it is being financed by debt. Which just got increased from $25m to $30m, supposedly to help the DEP, but that doesn't make much sense to me as I was under the impression that CUP was selling equity back to the principals in order to incentivise them. This would release equity back into the business which could be re-invested into the new model. Lastly, in the last line of the last paragraph of the announcement highlighting the new line of credit it says, 'A possible Dividend Re-investment Plan, which would be considered in the above funding mix (debt, retained earnings, sale of businesses in IPO) in due course....'

On the face of it, the financials and even the new business model seem quite attractive, but this negative cash flow (dividends being funded out of increasing debt) is a red flag to me. If anyone can explain or argue against it I would love to hear it!

 

[skc]

Re: CUP - Countplus

Wouldn't be too sure of the dividend yield, it seems that if you look at the last HY reports that CUP is still cash flow negative by about $4,052,000. This is in spite of a 74% lift in operational cash flows and it is being financed by debt. Which just got increased from $25m to $30m, supposedly to help the DEP, but that doesn't make much sense to me as I was under the impression that CUP was selling equity back to the principals in order to incentivise them. This would release equity back into the business which could be re-invested into the new model. Lastly, in the last line of the last paragraph of the announcement highlighting the new line of credit it says, 'A possible Dividend Re-investment Plan, which would be considered in the above funding mix (debt, retained earnings, sale of businesses in IPO) in due course....'

As a general rule of thumb when dividend yield is >8% fully franked, the market has either got it wrong, or is suspect of the future dividend stability. MND, NWH etc are other prime examples. When CUP was paying 3c per quarter dividend, it was trading around $1.75 or a yield of ~7%. When the dividend was cut to 2c per quarter around August last year, the share price promptly fell by the same amount to maintain much of that yield percentage.

Looking at the 2014 annual report, the company has shown very little growth in revenue or income for the past 3 years. So it's little wonder that no one really believed that CUP was going to generate growth with higher retained earnings.

On the face of it, the financials and even the new business model seem quite attractive, but this negative cash flow (dividends being funded out of increasing debt) is a red flag to me. If anyone can explain or argue against it I would love to hear it!

The alternate explanation is that, using the Dec 2014 half year as example, dividend ($5.654m) is paid out of operating cashflow ($9.054m). While retained earning (~$3.4m) and additional debt ($3.54m) were used to satisfy the $7.539m investing cashflow.

Provided the investing cashflow from the debt is generating future economic benefits, it is not necessarily a unsustainable situation.

 

[jbocker]

Re: CUP - Countplus

The company has released an unprompted explanation to the ASX.
It mentions their dividend expectations...
The dividend of 2 cent fully franked paid quarterly, in the absence of unforeseen events, is expected to be continued in 2015/16. The November 2015 quarterly dividend is expected to be declared next week.

The price has recovered somewhat.

 

[Cashflows]

Re: CUP - Countplus

The alternate explanation is that, using the Dec 2014 half year as example, dividend ($5.654m) is paid out of operating cashflow ($9.054m). While retained earning (~$3.4m) and additional debt ($3.54m) were used to satisfy the $7.539m investing cashflow.

Provided the investing cashflow from the debt is generating future economic benefits, it is not necessarily a unsustainable situation.

Thanks Skc for the reply, I guess what I find concerning is that a large portion of that $7.539m seems to be investing into past acquisitions, and I do wonder how much of that will produce higher returns in the future, though on the other hand it could be a part of their DEP. Just not sure about the business as a whole I guess, finding it hard to 'see' where it will be in a few years time...

 

[Cashflows]

Re: CUP - Countplus

Just not sure about the business as a whole I guess, finding it hard to 'see' where it will be in a few years time...

Down I guess...



So we went from this, 'On a continuing business basis, ie excluding any abnormals, our full year 2016 profit before tax budgets are in line with FY2015. However, it is too early to be more specific as to likely outcomes in 8 months’ time' Phil Aris

To this.... 'Based on our expected unaudited half year results, we anticipate our latest full year 2016 reforecast operating results excluding abnormals to be around 20% below last year.'...

Two and a half months later. Who knew accounting could be so volatile?

So a 20% decline of NPBT of $13,051,000 (I wonder whether they include the increase in valuation of the property of $1,680,000 as an 'abnormal' or not - maybe it depends on which report) means $10,440,000 before tax which means a net profit before revaluation of class shares of $7,308,000. Cash flow wise I'm not sure much as changed except a possible increase in costs due to the new business models, countered by increase in cash from DEP. However, it seems a bit unlikely that they can maintain a dividend of $10,071,000 while reporting a profit before revaluation of assets of $7,308,000....

I know it is too early to tell whether the new strategies will work, and while the impairments will not necessarily be against cash flows, it is still a down grade, and I'm cynical of my ability to analyse the books better than the accounting firm putting them together haha.

 

[WRiley]

Keen on CUP too. Looking closely at the Financial Highlight for FY2015/16, and extracting just one important point in that table on Pg 2,

Basic EPS : 12.13 cpu
Diluted EPS : 12.13 cpu

With the above EPS, it is surely able to cover the full year divvie payout of 8 cpu.

 

[WRiley]

Keen on CUP too. Looking closely at the Financial Highlight for FY2015/16, and extracting just one important point in that table on Pg 2,

Basic EPS : 12.13 cpu
Diluted EPS : 12.13 cpu

With the above EPS, it is surely able to cover the full year divvie payout of 8 cpu.

Looked back deeper into the financial side, looked at the 2016 ANNUAL REPORT released a few days ago, Page 9, Financial Summary. Should we remove the effect from the Non-cash fair adjustments amounting to $16,294,000 under the column '2016', and we 'process' all the way down that column till the 'Basic earnings per share (Cents)' line, we will still end-up with close to 9.01 cpu, which was the reading back in FY2015.

 

[WRiley]

Dropped to 78 Cts today after reports appeared concerning the AGM today and a presentation at the AGM this morning. What happened ? I don't see anything unusual in the reports which we have not been told before !

 

[So_Cynical]

Lucky i sold out of CUP a couple of weeks ago, just dumb luck as i had to sell something and just settled on CUP, Bought back in Feb at 0.65 and sold at 0.685 just as the SP fell over, looking cheap again after the dividend cut, the market pricing something that may or may not be permanent as beyond doubt.

That roll over pattern is a common sight...often followed by a little dip down to a new low then rebound.
~

 

[WRiley]

I'm waiting to see that rebound that you mentioned,... TA-wise, how high does it normally rebound to ?

 

[So_Cynical]

I'm waiting to see that rebound that you mentioned,... TA-wise, how high does it normally rebound to ?

TA-wise i have no idea, i imagine that 69 or 70c would be good going, perhaps an accumulation opportunity to buy the low 60's and then take part profits in the high 60's rinse and repeat to build a position....actually that sounds like a bit of a plan.

 

[WRiley]

The mkt dropped by almost a big 1% today, BUT CUP held on to its price range of 0.62 to 0.64. The mkt is of the opinion that CUP deserves this price under all mkt conditions. For this counter, there is just NO NEWS at all,... hence no catalyst at all, be it good or bad. Are we going to be kept in suspense until the FY Reporting in early-August ?

 

[PZ99]

Last time I saw CUP do well was because they'd invested in CL1 shares which masked the lackluster performance of the rest of the company's profits. I noticed the outgoing Chairman is getting involved with medical cannabahash. Maybe CUP should get into that as well? LOL

I divested for 90c some time ago and view it as a high risk investment in its current form.

 

[Ann]

CountPlus strikes deal to acquire accounting business Count Financial from Commonwealth Bank

Financial services firm CountPlus (ASX: CUP) has announced it will acquire 100% of Count Financial Limited from the Commonwealth Bank of Australia (ASX: CBA) in a $2.5 million deal which will house the entire Count network under the one roof.


The acquisition will be administered by CountPlus (which will hold 85% of Count Financial) and a special subsidiary of a discretionary trust established for the benefit of Count member firms known as CMFT (which will hold the remaining 15%).


When completed, the deal will bring the entire Count network together in one home to focus on the delivery of an accountant-led financial advice business model.


Today’s news follows CountPlus’ $2.48 million acquisition in April of a 40% interest in Melbourne-based Rundles Prime Pty Ltd and a 20% interest in Rundles Financial Planning Pty Ltd. More...

 

[Ann]

This had a big jump on the news over the last couple of days, let's see how it goes, it appears to have a bit of selling pressure up to about .80c looking at the Equivolume chart.

 

[RobL]

It might be worthwhile keeping an eye on this stock as the price breached short term resistance going north at AUD 1.004 closing today (Friday, October 4) at AUD 1.050 with above average volume. The next resistance level is AUD 1.095 and then AUD 1.140. The stock hit an all-time high of AUD 2.000 in October 2013 with an all-time low of AUD 0.440 in June 2019.

Disclaimer:
This information is for general information only and should not be used solely to base trading or investment decisions. Please do your own research. The companies website is here https://www.countplus.com.au .

Here https://decentralisedwealth.com/TopTens.html you can find some other interesting US stock’s to look at. Australian stocks will be added in the next week or so.