IVC - InvoCare Limited
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So_Cynical
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They are expanding, so they have a choice to buy into a new area or compete with the incumbent, the sensible thing would be to buy in, payout the incumbent and then give them a job.
No surprises really.
..buy country cos really they will be allowed few more in the city and that is where the other mob are......fully get the anticipated earnings from all that.....but unsure if that will translate into profit growth and trickle down to divs (and if yes in whose lifetime).....My surprise was that the div dropped...........what is that message?
bump
SARCASM WARNING 'getting some consistency now (with not meeting forecasts)' SARCASM WARNING
I will look again at $10-60 (but just delete that if we do not talk financial numbers)
Thought the same thing; things aren’t looking great.
Strangest Ann too; bad (good?) flu season meant numbers were down. It really is a morbid business!
what frustrates me is that it should be a dominating powerhouse in the industry - I mean who actually wants to be the competition to this (not talking about the other one).......and yet it is now another of my shares that requires capital management (when I am trying to have less of those).
So_Cynical
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Saw a chart last week to back this up, found a NSW one to demonstrate.
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Black line is 2018 top (pink) line is last year...yep its a super morbid business.
https://www.health.nsw.gov.au/Infectious/Influenza/Publications/2018/weekending-30092018.pdf
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I bought this in the IPO for about $1.60 (from memory) and been in the DRP ever since. The winter death rate was considerably lower than expected but when that’s happened before, there’s a reversion to the mean with higher death rates in the next couple of seasons. When the death rate drops, so does pricing power apparently.
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It won’t last though, there’s eventually reversion to the mean.
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I think one long term key risk with this stock that does not get much discussion is rising longevity of the general population. There is a real possibility (although it is far from certain) that in 20 years time the average life span of Australians could be substantially higher than today (due to medical advances). This would be obviously have a negative impact on their business.
This is aside from the well documented fact that roll up stories (i.e. growth via acquisition) have an extremely low success rate and in particular the risk seems to rise the bigger you get. In a roll up story it often works well in the beginning but once you start getting to big in your industry you have to buy more and more small operators to get the same level (percentage) of earnings growth. For example if you have to buy 30 dental practices in one year to get 15% earnings growth compared to buying 3 when you were much smaller.
When you make fewer acquisitions you can be more selective in regards to price, location, quality of the business, etc. But once you start making acquisitions in large numbers you have to be less discerning in addition to the fact that you may be pushing up the market price of such businesses when you buy so many of them.
I know Peter Lynch mentioned roll ups as a type of stock to look at buying but the failure rate of this business model appears to me to be far too high.
Can anybody name a roll up story on the Australian stock market that hasn't ended badly? Many look good at first but eventually they stumble. QBE insurance (under Frank O Halloran they made huge numbers of acquisitions), ABC learning, Greencross, G8 education, Retail Food Group. 1800 smiles is still doing pretty well but they are still tiny. Let's see how they fare in 10 years time when they are a bigger operation. Roll up stories are like cyclicals you have to get in and out at the right time. They are not usually buy and hold stocks.
This is aside from the well documented fact that roll up stories (i.e. growth via acquisition) have an extremely low success rate and in particular the risk seems to rise the bigger you get. In a roll up story it often works well in the beginning but once you start getting to big in your industry you have to buy more and more small operators to get the same level (percentage) of earnings growth. For example if you have to buy 30 dental practices in one year to get 15% earnings growth compared to buying 3 when you were much smaller.
When you make fewer acquisitions you can be more selective in regards to price, location, quality of the business, etc. But once you start making acquisitions in large numbers you have to be less discerning in addition to the fact that you may be pushing up the market price of such businesses when you buy so many of them.
I know Peter Lynch mentioned roll ups as a type of stock to look at buying but the failure rate of this business model appears to me to be far too high.
Can anybody name a roll up story on the Australian stock market that hasn't ended badly? Many look good at first but eventually they stumble. QBE insurance (under Frank O Halloran they made huge numbers of acquisitions), ABC learning, Greencross, G8 education, Retail Food Group. 1800 smiles is still doing pretty well but they are still tiny. Let's see how they fare in 10 years time when they are a bigger operation. Roll up stories are like cyclicals you have to get in and out at the right time. They are not usually buy and hold stocks.
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and there it is ...but spend is still too unclear ......
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I tend to wonder if life expectancy will increase, with the obesity epidemic and the sedentary lifestyle that is currently enjoyed in Australia.
bigdog
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https://www.fool.com.au/2018/12/20/why-the-invocare-share-price-crashed-7-lower-today/
Motley Fool reported today
Why the InvoCare share price crashed 7% lower today
James Mickleboro | December 20, 2018 |
One of the worst performers on the ASX 200 on Thursday has been the InvoCare Limited (ASX: IVC) share price.
The funeral company’s shares fell almost 7.5% in early trade to a 52-week low of $10.12.
Why is the InvoCare share price crashing lower today?
With no news out of InvoCare today, this decline is likely to be attributable to a trading update out of rival Propel Funeral Partners Ltd (ASX: PFP).
Propel’s update warned that continued weakness in funeral market conditions in Australia means that it expects operating net profit after tax to be in line with the prior corresponding period.
This weakness has been blamed on the funeral industry cycling through a strong prior corresponding period which included a severe flu season and below trend funeral volumes this year due to a benign flu season.
An example of this is the sharp decline in registered deaths in Tasmania so far in FY 2019.
According to Propel’s figures, registered deaths in Tasmania from July 1 to November 30 have fallen by 17.9% on the prior corresponding period. This has led to a materially lower number of funerals being performed by Propel in the market and presumably it is the same for InvoCare.
Propel also warned that other key Australian markets have experienced material estimated death volume declines, with most relevant markets experiencing at least a 5% volume decline in FY 2019 compared to a year earlier.
This appears to have spooked InvoCare shareholders and led to them heading to the exits in their droves today.
What now?
One glimmer of hope for InvoCare is that history is on its side.
According to Propel’s CEO, Albin Kurti, these tough trading conditions are expected to be temporary.
He said: “Historical experience suggests that the significant, year on year decline in death volumes we’ve seen in calendar year 2018 should be temporary, given the growing and ageing population, and prior year on year declines have rebounded quickly. When the rebound occurs, Propel will be well placed to benefit, given operating leverage within the business.”
Should you buy the dip?
At 21x estimated forward earnings I don’t see a lot of value in InvoCare’s shares at these levels, especially given the tough trading conditions it is experiencing.
In light of this, I intend to stay clear of its shares until trading conditions are far more favourable.
.... and so it came to pass ...... they needed more of my xmas money at $14 in that raise and it has now made a 52wk high at $16 odd and just $1 off all time highs. got me stuffed as i do not see the value but i do recognise green. trade the trade.
(post is about if it will go another $)
So_Cynical
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We are 2 bucks away from the all time high of 17 months ago, its been a real fast turn around, IVC is a roll up and thats a negative of sorts but its a roll
up in an industry that no one wants a bar of and yet everyone will contribute to at some point, i always looked at IVC as one of those quality stocks that
everyone should hold and thought the opportunity of late 18 was too good to pass up...i do have a knack for these things.
~
up in an industry that no one wants a bar of and yet everyone will contribute to at some point, i always looked at IVC as one of those quality stocks that
everyone should hold and thought the opportunity of late 18 was too good to pass up...i do have a knack for these things.
~
thanks (2 bucks)
i missed that 98c on the back end of the 17 but knew it was headin for a record (and do not know why) ............. maths was never my strong point. when the lead up to the CR at $14 had the sp suddenly at $14.50 i was certain it was a pump and gunna go sub $14 again after the raise (instead of burbling along to $15.50. anyhow, good looks will get me thru. next div amount will be interesting.
(remx down 2 but i sorta thought that when lynas otc opened down 5 - too late to pull)
sub $14 trades 2day ........ they do pets now ....... wonder if that can all happen concurrently for those that wish that? (joke peeps - or is it?)
(forget remx ...... barely got a cent in that ...... at least there is no tax on a 1 cent profit.... sometimes those coins can be material though
)
(forget remx ...... barely got a cent in that ...... at least there is no tax on a 1 cent profit.... sometimes those coins can be material though
)
Knobby22
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My pick. Big rise today and an obvious winner if the virus hits our shores.
So_Cynical
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The big fall in late 2018 was all about the low death rates from the flu, COVID-19 will eventually
lead to a higher death rate, more funerals, this winter or the next it's unstoppable, a certainty.
lead to a higher death rate, more funerals, this winter or the next it's unstoppable, a certainty.
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