DOW - Downer EDI

[vishalt]

hahahahaha at this stock, so many gap downs its amazing

I think the hint that its a bad stock was in the name ... DOWN(er) EDI

 

[Sean K]

This is getting worse and worse at a time when it's divisions should be pumping!

Sum of parts must be looking tasty to LEI or WOR, or anyone with spare change...

 

[maverick11]

One of downers divisions is dragging it down. I hear rumours of a possible leightons takeover in the near future. Although, Im wondering if competition laws could come into effect?

 

[Sean K]

I wonder if DOW will do it's usual thing after a massive sell off.

Although, this self off is market related I suppose and not through a company **** up.

Still if it follows the trend, there's a potential move from $5 back to $6.50-$7 ish if it follows the previous trends.

Obviously past performance is no guarantee of nada, but interesting nonetheless.

 

[skc]

What a Downer! Problems at Reliance rail was well flagged so surprised to see such savage reaction today. Stock down 23% and below $5. They were $9.5 not that long ago.

The punters might be fearful that a cap raising is on the cards - which usually happens a month after a company denies that they need to raise capital. Today's announcement left the door ajar for some cap raising imo.

Still... most likely overdone in the short term so probably a bounce tomorrow if the overall market isn't too crazy.

 

[kingkev]

Down down depper and down

Taken a hammering today

How much lower can it go before a takeover looms

 

[skc]

Down down depper and down

Taken a hammering today

How much lower can it go before a takeover looms

Thankfully the rest of the businesses are going OK which propped the share price fall today. HY EBIT of ~$132m means FY NPAT ~$200m (assuming they don't pay any tax this year), or ~58cps. At $3.60, PE is 6.2...compare that to LEI which trades at ~15.

However I think the situation is a bit politically sensitive for a takeover to be launched right now. No one would like to be the guy looking after this rotten project under the scrutiny of various political parties and risk heaps of reputational damage. May be when things are back on track mid-late 2012 (with delivery schedule being met) and the share price is still depressed...

Something I couldn't understand about the $250m provision, which included a positive impact of $92m from the delay. Here's the description... it just seems like a very large number out of no where...

Manufacture Delay Income
Under the prime contract between Downer and Reliance Rail, milestone payments are paid to Downer by Reliance Rail in accordance with the actual delivery schedule achieved. To the extent that these monies are not paid to Downer (and indeed Hitachi) due to late delivery and missed performance milestones, the monies are held by Reliance Rail in a ‘Manufacturing Delay Account’ (MDA), with the monies invested to earn interest income.
The RSM contract provides that monies held in the MDA are to be paid to Downer upon achievement of contracted milestones, and that interest that accrues on the MDA is to be paid over when train set 78 is delivered to Reliance Rail.
Total interest of $94 million is projected to accrue against the MDA for the benefit of Downer, which will be payable to Downer in October 2014 based on the projected delivery of train set 78.

 

[kingkev]

It appears that the share price has taken a hammering and many see this as a bit of over-reaction. It is still in a depressed state however pundits are putting this stock on buy recommendations because of the overreaction and the fact that other parts of their operations are still very good Might be a good time to get in.

 

[zzaaxxss3401]

I bought in at $3.66 when they dropped and sold out recently nearer to $4.00. I'm watching, but was worried they were going to enter into a trading halt prior to announcing a capital raising.

 

[kingkev]

I am also one that cannot understand how you can actually make money by delaying the whole project. The issue here will probably be the delivery of train set 78 being on time. If the delay cannot deliver on time there wil be no positive impact but if it is only a hiccup and they can still deliver the final goods on time...how do they still make $9m?

The mind boggles

 

[prawn_86]

Up a lot this morning on the back of them actually hitting their profit guidance. They pretty much miss it every reporting season so actually hitting it has forced a repricing

 

[Knobby22]

I've been in due to technical reasons since Christmas and the company is one of my better performers. They have been drifting back but a sharp jump again today. Dividends have returned and PE looks to be about 9 for the year. Infrastructure boom expected after the election?

 

[skc]

I've been in due to technical reasons since Christmas and the company is one of my better performers. They have been drifting back but a sharp jump again today. Dividends have returned and PE looks to be about 9 for the year. Infrastructure boom expected after the election?

The jump is not sector-wide.

JPM (or was that UBS) has a write up on them this morning.

I had a long from yesterday but managed to sell this morning at $4.85... speaking of leaving plenty on the table!

 

[Knobby22]

Bad luck. Thanks for the information.

 

[systematic]

This one must currently be on the radar of serious income/dividend investors?

 

[So_Cynical]

This one must currently be on the radar of serious income/dividend investors?

Belated thanks for bringing DOW to my attention, i bought a thousand shares on the 10th Dec 2015 @ $3.35 as im slowly switching to dividends.

It dipped a little over the NY but doing ok now, a little all boats rising when the tide comes in i suppose, i needed a solid dividend stock as retirement approaches, at the time i was hoping the $3.30 bottom line would hold..anyway, all good, dividend held.
~

 

[systematic]

Belated thanks for bringing DOW to my attention, i bought a thousand shares on the 10th Dec 2015 @ $3.35 as im slowly switching to dividends.

I hope it works out to be a wonderful trade.

I'd like to hear a little more about why you're focusing on dividends for income - if you're happy to share any thoughts. I haven't thought a great deal about it (retirement income) as yet.

 

[So_Cynical]

I hope it works out to be a wonderful trade.

I'd like to hear a little more about why you're focusing on dividends for income - if you're happy to share any thoughts. I haven't thought a great deal about it (retirement income) as yet.

Dividend still holding and uptrend in place, good news flow and $4.75 close...wonderful trade indeed.

I'd like to hear a little more about why you're focusing on dividends for income - if you're happy to share any thoughts. I haven't thought a great deal about it (retirement income) as yet.

Focusing on Dividends because my super wont be tax free for another 7 years so plan on leaving that alone, thinking that the dividends are fairly regular spread across the 30 stocks i hold when looked at as a whole, so regular dependable income from dividend (mostly tax paid), trading profits as a bonus.

 

[systematic]

Dividend still holding and uptrend in place, good news flow and $4.75 close...wonderful trade indeed.

...I'm so pleased. I did wonder the other day whether you were still in. I looked again at some dividend stuff the other day (which obviously I don't normally do) and DOW still shows up in the top group on that and other measures.

Focusing on Dividends because my super wont be tax free for another 7 years so plan on leaving that alone, thinking that the dividends are fairly regular spread across the 30 stocks i hold when looked at as a whole, so regular dependable income from dividend (mostly tax paid), trading profits as a bonus.

...Cool, thank you. Dividends are certainly an important part of a longer-term trader's profits. Just look at the results on the magic formula thread. Dividends don't even feature in the selection process, but made up something like a third of the returns!

Will you be concentrating on dividend stocks in retirement, do you think? Or just buying as you currently do and dividends are the byproduct of a longer-term approach etc?

 

[So_Cynical]

Cool, thank you. Dividends are certainly an important part of a longer-term trader's profits. Just look at the results on the magic formula thread. Dividends don't even feature in the selection process, but made up something like a third of the returns!

Will you be concentrating on dividend stocks in retirement, do you think? Or just buying as you currently do and dividends are the byproduct of a longer-term approach etc?

Over the last 6 years dividends have consistently made up about a third of my return, average total return of around 13 - 15% PA with dividends being about 3.5 to 4.5% of that...dividends are important.

When its time to add a new stock dividends play a big part in my selection process, my annual dividend growth is lagging my portfolio growth and has been for the last 3 years, actively addressing that now...i have enough non dividend stocks.

Two edged sword as often its the non dividend stocks that move, a balanced portfolio needs both but should be slanted to dividends, in my main portfolio i have 35 stocks at the moment (max will be 40) with 12 current non dividend payers though im confident that 3 or 4 of those will begin paying over the next 12 months or so.