Hi Mofra......
I'm more worried about their exposure to their trading arm.... Per their annual report, they 15.5 Bil held as trading assets - that's 2x net equity. In addition, they say Maximum daily value at risk is 15.22 Mil - however, this of course is based on 95% of market conditions - so my question is that in a situation that has occurred where we have conditions that are essentially black swan events happening all over the world, how have they fared? One stat I draw your attention to is the notional amount of their derivative contracts outstanding - $0.8 Billion Dollars AUD in March 07- a wrong move here could be deadly! Surely by now they know how they have fared in relation to trading instruments (in fact, they should be able to mark to market it on a daily basis). Or are they having problems mark-to-marketing their books because some of their investments no longer have a liquid market.
I think that if you review the chart, you will see that something is fundamentally wrong here. Is this a correction for MBL, or the beginning of a downtrend? In reference to your yield play comment, is it really a yield play if net profit is down 30% next FY, which it could very well be (especially if there are any impairment issues)? As the payout ratio is fixed (or relatively fixed), this would mean that the yield really would be exactly what it was at $90 at our now deflated price of $60.
I am also thinking about the medium term and the medium term is that debt is going to be a hell of a lot more expensive. Cheap debt and hot equity markets are what have made MBL a good (paper profit) business - lets see how the model lasts in the conditions we will be exposed to over the next couple of years.
Put it to you this way - if it rallies to above or about $75, I will be shorting the *&^* out of the stock. Just my independent view however.
All the best