I've been thinking about this more and more since the result.Probably. I know the story that underlies my valuation of MMS has declining profitability for the remuneration services business for that exact reason.
I'm caught in two minds - competition has really ramped up and they're gunning for that contract and MMS' hand has been forced to significantly reduce their margin or lose it.
The legislative risk diminishing has made the industry more attractive so the competition increases just as you say. I'm not sure who the price leaders are? Are MMS responding as you suggest or are they leading the price down now after not being so sharp when there was more present legislative uncertainty.
Today's report follows ASIC's release of two reports in February this year about the sale of add-on life insurance by car dealers. ASIC stressed the need for insurers to address the high costs, poor value and poor claim outcomes of life insurance products sold this way.
ASIC is putting general insurers on notice that they need to improve consumer outcomes by making substantial changes to the pricing, design and sale of add-on insurance products or face additional regulatory action. The key commitments we are seeking from insurers are:
A significant reduction in the amount of commissions paid to anyone who sells an add-on insurance product through car dealers
A significant improvement in the value offered by these products, through substantial reductions in price and better product design and cover
A move away from single upfront premiums that are financed through the loan contract, given the adverse financial impact this has on consumers
Providing refunds to consumers who have been sold policies in circumstances that were unfair, such as where a policy has been sold to a consumer who was never eligible to claim under the policy
Insurers have notified ASIC that they intend to implement a 20 per cent cap on commissions, which is a positive step. Insurers in this market will be also providing ASIC with data on prices, premiums and claims on a regular basis so that we can monitor the impact of changes on consumers.
I Actually prefer smart group over this it listed today and dropped 9% so I pick up some...seem reasonable price with risk and reward after the price drop.
Their earning is fairly diversified and not all ties to car leasing, their revenue only drop 4% with the FBT
debacle ... 4 times smaller and has room to grow
but both are good business with regulation uncertainty.
• Scrip and cash: 0.1414 MMS shares and $0.46 cash offered for each Eclipx share held, implying a total value of $2.85 per Eclipx share based on MMS’ last closing price of $16.90 on Wednesday, 7 November 2018
• The consideration represents a 33.2% premium to Eclipx’s undisturbed price of $2.14 on Friday, 17 August 2018
Hi @galumay
No, other than cash, I have no alternative to MMS. If I found an alternative, I use existing cash first before selling MMS. I still need to study this merger. As I said - I haven’t made up my mind about MMS.
McMillan Shakespeare and Eclipx will combined to be bigger than SmartGroup.
Thanks Pete for your share.Getting a position in MMS is proving to be difficult. In my first attempt price jumped over my buy limit and I miss out on a losing trade. My second attempt has also been thwarted by disappointing price movement.
2nd setup: Bullish weekly bar (key reversal) with high volume. Things were looking positive as the merger with Eclipx looks likely to be aborted. Price opened higher after the news but ended down on the day. I raised my exit trigger to remove some of the initial risk while allowing price to test the BO level (13.00). However price closed below the exit trigger yesterday and I've sold this morning and realised a small loss (-0.5R). I'll re-enter if price closes above 13.00 again provided price doesn't close below 11.50. This stock has been as slippery an an eel.
Clearly this price corrective pattern is not complete and is now below the 61.8% fib level of the prior impulsive move up. I would suggest that the MMS mgt team have a bit of work to do to get this business back on track.
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