MMS - McMillan Shakespeare

[twojacks28]

I think the Lib will win but I wouldn't be too sure as
past events tell you sometimes people tell you one thing in poll and vote another in polling booth ..

if this is the case those margin seats the result will still be 50/50 ......

sometimes electorate passively tell you in poll number so you do something about their seat and votes the other party on polling day..

The Libs are a certainty to win. The old Rudd is appearing again and he bookies now have them at $7. Unless some incredible miracle happens then they have nan chance.

 

[galumay]

Post-election pricing for MMS is now what I focus on.

I suspect they are already fully priced for the election, the market thinks there is almost no doubt the LNP Coalition of Minorities will win the election and has priced the stock at $11-12 on that basis.

As a holder I am happy to be proven incorrect, but I am not expecting much more upside in the near future.

 

[FxTrader]

I suspect they are already fully priced for the election, the market thinks there is almost no doubt the LNP Coalition of Minorities will win the election and has priced the stock at $11-12 on that basis

I serious doubt this to be the case. It's only the uncertainty that's keeping MMS at the current price level. Value investing firms like Clime have MMS valued at over $15 and they are usually more conservative than Mr. Market.

 

[twojacks28]

I serious doubt this to be the case. It's only the uncertainty that's keeping MMS at the current price level. Value investing firms like Clime have MMS valued at over $15 and they are usually more conservative than Mr. Market.

Totally agree. This is only going up and I think it will be $12 tomorrow. I'm thinking around the 14-15 area is where it will end up trading around.

 

[galumay]

It's only the uncertainty that's keeping MMS at the current price level.

Uncertainty about what!?

I am happy for you guys to be correct, but if I am right and its fully priced at round $12 I am very happy too!

 

[db94]

Uncertainty about what!?

I am happy for you guys to be correct, but if I am right and its fully priced at round $12 I am very happy too!

I kind of agree with you, however there is still a chance of Rudd winning; its not much but theres still a chance. This is why $14-15 mark should be about right... i hope

 

[VSntchr]

I think it is dangerous to get too caught up in trying to figure out where MMS "should be" simply based on the election outcome.
While it is a factor, it should not be used to price MMS based on where it was pre-announcement. Just remember that only a few months ago it was $14...which it is really not that far from now already...

Whilst others such as SKC have already mentioned this, I think its important that it is re-iterated..the stock may no longer command the multiple achieved pre-announcement for a number of years. Even if Labour does not win - the stock is not completely de-risked and the legislative risk will be fresh in investors minds.

 

[FxTrader]

I think it is dangerous to get too caught up in trying to figure out where MMS "should be" simply based on the election outcome. While it is a factor, it should not be used to price MMS based on where it was pre-announcement. Just remember that only a few months ago it was $14...which it is really not that far from now already...

Not "dangerous" at all and while valuation methods may vary the analysts that I follow have MMS valued at between $14-$15 post election of a coalition government (that's fundamental analysis not chart reading). MMS's market position will be even stronger than before and the financials quickly restored - car leasing will continue to be as popular as before. We shall see where the price ends up. BTW, $14 is 20% away from the current price and I would be quite satisfied with another 20% thanks.

 

[Accumulator]

Not "dangerous" at all and while valuation methods may vary the analysts that I follow have MMS valued at between $14-$15 post election of a coalition government (that's fundamental analysis not chart reading). MMS's market position will be even stronger than before and the financials quickly restored - car leasing will continue to be as popular as before. We shall see where the price ends up. BTW, $14 is 20% away from the current price and I would be quite satisfied with another 20% thanks.

My sentiments too FxTrader...spot on!!

 

[db94]

With recent polls getting worse for ALP, today could be a good day. the odds now at Coalition $1.09 and Labor $7.25

I feel a break through $12 today

 

[Hodgie]

I think where Valuesnatcher is saying that it's 'dangerous' is the fact that if the election results are favourable for MMS
the price goes up to $14+ which reflects 20%+ increase from current price while we are risking potentially a 50%+ decrease in value if the ALP won.

So if the current price continues to rise over $12 and beyond which has been mentioned previously in this thread, the upside of the post election price becomes less attractive while the downside risk continues to grow. This needs to be taken into consideration when doing a pre-election valuation. The market price may ignore the downside risk (this seems to also be a common theme) and only value in the potential upside.

At some point if the price continues on this upward trend before the election it may not be worth the risk to hold MMS even if the chances of the ALP winning are slim.

I have current holdings in MMS and if the pre-election price continues to grow as it has been then I may consider taking my profits before the election results are in.

 

[galumay]

I think where Valuesnatcher is saying that it's 'dangerous' is the fact that if the election results are favourable for MMS
the price goes up to $14+ which reflects 20%+ increase from current price while we are risking potentially a 50%+ decrease in value if the ALP won.

Actually I think what Valuesnatcher is saying is that its dangerous to link the price of MMS too closely to the election result - because its probably already fully valued at around $12-14 and in fact was over valued when it was $18 and the market is unlikely to price it so highly again regardless of the election result.

 

[Hodgie]

Actually I think what Valuesnatcher is saying is that its dangerous to link the price of MMS too closely to the election result - because its probably already fully valued at around $12-14 and in fact was over valued when it was $18 and the market is unlikely to price it so highly again regardless of the election result.

We are getting at the same point here, perhaps my wording was not the best. I agree completely with what you have stated here.

When I say potentially $14+ I was just using the valuation figures thrown (this is not my valuation) out based on the scenario if the price did increase to that level post election. I am not saying that it will. It was merely for the purpose of illustrating how much greater the potential downside risk is compared to the potential increases from current price.

 

[Knobby22]

If all those people have actually been made redundant, then they will have to pay them out. this will appear in the next 6 months and will definitely hit the bottom line.

 

[craft]

If all those people have actually been made redundant, then they will have to pay them out. this will appear in the next 6 months and will definitely hit the bottom line.

As far as I understand MMS hasn't made anybody redundant yet. A lot of other industry players have already had to though.

 

[craft]

If the FBT rules don’t change, I would think the second chance and fear of missing out again will see people eager to lock in while they can. More leases, longer terms, wish list car rather than just adequate etc - ie maximising while they can. MMS has retained their staff so the business as usual earning stream looks good. Costs for carrying excess staff between the announcements and the election will hit 2014 but to the extent people took forced holidays it’s already funded in the employee entitlement accrual.

If the FBT changes do occur – the downside earnings stream is probably better then prior to the announcement because labour has been talking about exemptions for Aus built cars and $3,000 exemptions for government employees etc. Ie they are softening their stance and that would be reflected in any eventual legislation if they were re-elected.

In my view, earnings stream implications are positive both on the business as usual scenario and the removal of the FBT scenario.

In comparison to prior to the announcement my probability of earning stream change timing has obviously worsened if Labor has power but improved if liberals are in power. Labor’s chance of having the power to legislate any time soon is pretty dismal in opinion.

On balance - all above actually increases my estimation of MMS balance of probability earnings stream.

The real change is the market multiple being applied. That has taken a major hit and will be a matter of years (if ever) not days, weeks or months to reach pre announcement levels again. MMS needs to help itself on the multiple front by continuing to broaden its earnings streams (ie interleasing) and geographic spread (ie UK trial).

I suspect under a liberal government it is feasible that MMS could take out previous highs within a reasonable period but it will be on a combination of higher earnings and lower multiples – the tail risk to earnings will remain and presents a stimulating investment challenge.

 

[Ves]

MMS needs to help itself on the multiple front by continuing to broaden its earnings streams (ie interleasing) and geographic spread (ie UK trial).

This was one of my fairly big focusses in my investment research.

MMS is one of the few, or perhaps the only, leasing companies in the salary packaging administration space that has bothered to expand into other earnings streams and look at vertical integration possibilities.

A Coalition victory would provide sufficient opportunities to use the excess free cash flow from their FBT revenue streams to continue down the path of expanding the diversity of their revenue base.

The de-risking process started in 2011, and arguably is still in its infancy. If management is capable, and my opinion is that they are, then they will be much better placed when the gong is sounded next time around by willing legislators.

My opinion is that the threat of the enforced changes to FBT by the ALP has significantly weakened MMS' competition through forced redundancies and has in effect enhanced (or at least reinforced) their competitive moat.

 

[twojacks28]

Article from today's Australian - http://www.theaustralian.com.au/bus...gnals-rudds-woes/story-fn91v9q3-1226700167538

 

[db94]

Just fell back under the $12 mark and hasn't been moving as much. Maybe the election result has been fully factored in by the market for MMS

 

[db94]

Adding on that: there's also gap between 11.50 and 12 (on 5 day chart) that id be weary about