NVT - Navitas Limited

Re: NVT - Navitas

mr. jeff said:

I haven't been closely following NVT lately, so I apologize for ignorance, however one point that is quite important here is that NVT has been losing students in Australia. When they have highlighted enrollment numbers, it seems to be in their smaller markets overseas.
I think it is very important to note that the transferability of their business is successful, but it has been noted in the Aus Fin Review that about 80% (anyone read this?) of their current revenue comes from Australia and at the moment Australia is struggling with student numbers. This is the concern and what I think weighs on the stock currently.
What happens long term of course is different; but whilst watching a holding retreat 15 - 20 % whilst that money could be elsewhere is always a bit sad.
I think NVT is a good business and well run and it does seem that they have good promise, particularly in the overseas markets, so perhaps just a rough patch while Australia struggles...
Sorry long winded, just a bit of rubbish to kick around.

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On the contrary, Mr jeff, you've made important points that seem to have been previously overlooked. The government's policy on student visas I'd have thought is pretty fundamental to this stock.

robusta said:

But would you be confident to buy a business like CBA, WOW or MND in the middle of the GFC just looking at a chart? That would scare the crap out of me.

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But robusta, you are not buying any of these well known and respected companies by "just looking at a chart', are you?
We all are familiar with these businesses, and know how well run and successful they are.
Imo you don't need to crunch out such stuff as intrinsic value. All that really matters is the price action when it comes to making money, given you have no reason not to be confident you're investing in a good business.

I've said it often before: you can have a business which stacks up on all your painstakingly calculated criteria but if market sentiment doesn't agree with you, then you just won't make money, at least in the reasonable future.

Re: NVT - Navitas

robusta said:

But would you be confident to buy a business like CBA, WOW or MND in the middle of the GFC just looking at a chart? That would scare the crap out of me.
But if I knew MND worth $12.00 intrinsic value, sp = $6.00 that would give me some confidence.

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At the bottom of the GFC (Mar 09) i came into some cash selling out of 2 Gold stocks that recovered earlier than the general market, as the Gold stocks had bottomed 4/5 months earlier.... i tried to buy 2 stocks, PPT and STW, i low balled them a little to much and they rallied away from me, i would move my price up 10 or 20 cents and they would keep on moving up...still kicking myself for not just buying at market.

I ended up buying and holding ALL for about 7 days in the first week of April made a fast 5 or 6% and moved on....its a little nerve racking buying big bottoms because its impossible to pick em so you have to back your judgement and do it accepting that there's a good chance the SP will keep falling.

I tell you what...the first time you do pick a near bottom, back your judgement and win, pocket the money and think how easy was that! .. every time i do it now it just gets easier to do, probably not a good thing cos im getting a little blasé about it.

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We better stop side tracking this thread and get back to NVT talk....i want to buy NVT because the price is falling and its a great business with great potential once they diversify there currency revenue, as they are planning to do.

Re: NVT - Navitas

NVT SP rise could be attributed to a few things today (but i'm still holding out).

- Write up in the AFR > CEO coming out and basically saying that his company is oversold and analysts who are delayed in their reporting have created panic amongst holders.

- More from the AFR > UBS (I think) have upgraded their status on NVT to 'hold' or 'buy'. I'm still not convinced with the student numbers situation in Australia (the CEO even made mention that he expected flat growth from Australia!). Make a more accessible Student Visa and I'll be more convinced.

AUD at record high's also makes for not a lot of love.

Re: NVT - Navitas

Massive acqusition just announced by NVT. I have no idea what this will do to the SP. Any thoughts? I'm interested as I've sold 80% of our hold during the year...

This is one announcement but there is an investor presentation of about 25 pages as well.

ASX RELEASE
14 December 2010
Navitas expands global education offering with acquisition of SAE Group
Global education services provider Navitas Limited (ASX: NVT) today announced that it has entered into an agreement to acquire 100% of SAE Group (SAE), a leading global provider of creative and new media education.
Highlights:
 Navitas is acquiring SAE for A$289 million, representing 8.75x estimated CY2010 EBITDA
 The acquisition is expected to deliver high single digit adjusted EPS accretion in FY2011 on a full year pro forma adjusted basis (based on broker consensus estimates for Navitas) 1
 The transaction will be funded by way of new debt facilities, a fully underwritten institutional equity placement and issuance of shares to the vendor
 Post acquisition, Navitas will retain a strong balance sheet with material additional headroom under new facilities
 Navitas will pay a deferred amount on any final audited EBITDA in excess of A$33 million in CY2010 at the same 8.75x multiple (in shares at the institutional placement price)
SAE Group
Founded in Australia in 1976, SAE has expanded to become one of the world’s largest media technology training institutes, with 47 campuses in 19 countries.2 SAE offers a range of post secondary education opportunities to approximately 8,000 students, including certificate, diploma, degree and Masters programs across three major fields of study: audio production, film production and interactive media.
SAE benefits from high brand recognition within its core markets and is well placed to continue to benefit from growth in demand for multimedia and technology skills. SAE owns and maintains its key intellectual property and delivers its programs via a combination of classroom based teaching and practical learning in its state-of-the-art training facilities.
SAE is expected to deliver revenue of $109 million and EBITDA of $33 million in CY10. On a constant CY10 currency basis, SAE recorded $100 million of revenue and $28 million of EBITDA in CY09.
1

Re: NVT - Navitas

I'm buying more at this price

Uncle Warren Buffett Love this business so much so that
he try to buy NVT before it went public but Rod Jones

say no thanks, we aussie want to take it public and let aussie in
benefits..

this business model has negative capital requirement
cant get any better than that...

Re: NVT - Navitas

Whilst I agree that fundamentally this is a great business, with a great business model (and one that I would certainly love to own). I really cant justify myself purchasing any at current prices, even after the recent falls in price.

Based on NVT hitting $69m NPAT my valuation is roughly $2.20...far below the current share price.

NVT will stay right next to SEK in my "high quality but too expensive watchlist".

Re: NVT - Navitas

VSntchr said:

Whilst I agree that fundamentally this is a great business, with a great business model (and one that I would certainly love to own). I really cant justify myself purchasing any at current prices, even after the recent falls in price.

Based on NVT hitting $69m NPAT my valuation is roughly $2.20...far below the current share price.

NVT will stay right next to SEK in my "high quality but too expensive watchlist".

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Have to agree with you there Valuesnatcher, will have to keep on waiting.

Re: NVT - Navitas

I used to buy cheap stocks valuing at 5xP/E, 0.5xP/B, but those things did not work so well. You hope the market will notice the discrepancies and correct it, but have no idea when it is going to happen. But when I started to buy great businesses a few years ago, traditional accounting metric like P/B, P/E and P/S have played a less important role than before.

What I am trying to say is that we should think out of the box. A stock trading at 30xP/E does not mean it automatically qualifies as a bad investment, although in most cases the answer is yes. I know we need years to accumulate knowledge to build our existing model, but it is worthwhile to go a step further and think a bit differently.

My best investment in recent years Delticom, a stock trading in Germany. I bought it at the start 2008 @ 13.8 before the GFC really hit, and it had went up almost 6 times adjusted for dividend in 3 years time. And the funny thing is that, I bought it at 16XP/E, and it is now trading at 23XP/E. If I were stick my old paradigm, I would have missed the boat completely or sold out when it was up 100%. Sometimes you just need to sit on your ass and let the show rolling.

Re: NVT - Navitas

frankbaozhu said:

I used to buy cheap stocks valuing at 5xP/E, 0.5xP/B, but those things did not work so well. You hope the market will notice the discrepancies and correct it, but have no idea when it is going to happen. But when I started to buy great businesses a few years ago, traditional accounting metric like P/B, P/E and P/S have played a less important role than before.

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P/E is IMO the worst indicator and as a rule I do not use it at all. If you are trying to value a company and hopefully buy it at less than that value why wuold you factor price into the equation. Better to work out the value then look at the price and act accordingly.

frankbaozhu said:

What I am trying to say is that we should think out of the box. A stock trading at 30xP/E does not mean it automatically qualifies as a bad investment, although in most cases the answer is yes. I know we need years to accumulate knowledge to build our existing model, but it is worthwhile to go a step further and think a bit differently.

My best investment in recent years Delticom, a stock trading in Germany. I bought it at the start 2008 @ 13.8 before the GFC really hit, and it had went up almost 6 times adjusted for dividend in 3 years time. And the funny thing is that, I bought it at 16XP/E, and it is now trading at 23XP/E. If I were stick my old paradigm, I would have missed the boat completely or sold out when it was up 100%. Sometimes you just need to sit on your ass and let the show rolling.

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NVT is still too expensive for me but it has nothing to do with P/E, in my portfolio of seven companies three have a P/E of 17 plus.

Re: NVT - Navitas

NVT has no investor relations. When I phoned their corporate headquarters a few weeks ago I asked to speak with Investor relations. I was asked were I was from and I told the receptionist I am a share holder and she replied "Oh you are just a shareholder?". I was told that the company secretary would return my call but they never did.

Re: NVT - Navitas

tinhat said:

NVT has no investor relations. When I phoned their corporate headquarters a few weeks ago I asked to speak with Investor relations. I was asked were I was from and I told the receptionist I am a share holder and she replied "Oh you are just a shareholder?". I was told that the company secretary would return my call but they never did.

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Small shareholder don't get much time and I think it is fair enough, imagine you get a couple of thousand small shareholder ring up and want questions answer, they have better things to do

I normally write email and if I get an answer I rate them a bit better
I got reply from ONT CEO sometimes ago before I invest in that stock...

Re: NVT - Navitas

Robusta, no offense, just my 2 cents here. If I injected into this conversation unwisely, my apology.

I own a company in Germany called SMT Scharf. I wrote to the company twice, and the CEO replied to me without 24 hours, twice with a length that you must think he got plenty of time to spare. I also wrote to other companies, but it turned out to be not so well.

Generally, if a CEO did reply to you personally, it is either the CEO is not busy, or he cared about his business and want more people to understand it. If it is later, it is a good sign.

Re: NVT - Navitas

Strong report today from NVT.

Revenue up 7.9%
Profit up 18.4% on pcp.

Mystified as to your valuations of $2.20. Interested in how that valuation is calculated ?
Maybe from Value-able ??

This year the stock has traded between $3.40 and $5.40, currently at $3.82 and IMO will trade higher after today's announcement.

Agree the stock is fairly expensive, have a DCF valuation of $3.00 to $3.30 by my calculations, but the stock generally trades much higher than that.

Interested in any comments.

Re: NVT - Navitas

Noddy said:

Strong report today from NVT.

Revenue up 7.9%
Profit up 18.4% on pcp.

Mystified as to your valuations of $2.20. Interested in how that valuation is calculated ?
Maybe from Value-able ??

This year the stock has traded between $3.40 and $5.40, currently at $3.82 and IMO will trade higher after today's announcement.

Agree the stock is fairly expensive, have a DCF valuation of $3.00 to $3.30 by my calculations, but the stock generally trades much higher than that.

Interested in any comments.

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I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot.

Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.

Re: NVT - Navitas

frankbaozhu said:

I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot.

Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.

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Thank you for your response.
So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
I think it's expensive, but based on 2010 trading levels, I think it's a good buy.

Re: NVT - Navitas

Noddy said:

Thank you for your response.
So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
I think it's expensive, but based on 2010 trading levels, I think it's a good buy.

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Hey Noddy, a lot things depend on your own expectations. If you are aiming for 30%+ annually, NVT is not for you; but if you are looking for a 10% total return over the years, this is a very safe bet. If you still want my opinion, I would say this thing is something between fair-valued and expensive. Nothing scientific or concrete, just sheer feelings after several hours of research.

NVT has a very strong business model, which enables it to grow when paying 100% earnings as dividend and still has cash to expand its operations. It is like an insurance company. The advanced tuition is float it holds which can be invested at very high return rates. There are many investment opportunities for NVT at the moment, so if past experience(the old campuses) is of any indication, then NVT is a good buy. However, things tend to go wrong from time to time. In bad businesses, things go wrong a lot; in good ones, it still happens.

One thing bothers me is that NVT now sets foot in the markets they are not so familiar with. I am at best an amateur on education businesses, but I would not expect things develop at the same rate as that in AU market. What is the confidence level of yours that the major investment made recently will pay off handsomely? At current price, you have to figure them out before you make a decision. If NVT is trading at 50% of current price today, you might just go out and load up without thinking about those stuff.

Another word about cheap or expensive. When looking at investments, I do not speculate where they are traded, where they are trading, not to mention how price will change the next day. My experience with trading stocks is always that when I sell, it goes up; and when I buy, it goes down. That's why I based my conclusion on the valuations and risk/reward profiles.

Last year I bought AMA at 0.044 and today I am thinking of buying more. Conventional wisdom will tell you to take profit when it is up 200% in a few months, but it is just wrong. A stock will not automatically become a sell when it goes up; and it will not become a buy when it goes down. Investing successfully involves valuing an asset objectively, no matter how the market fluctuates.

Hope this helps. I myself still try to learn every day. It just never ends.

Re: NVT - Navitas

FRANKBAOZHU

Appreciate your interesting reply.
I generally buy on the back of profit announcements, and hold for a relatively short time, usually up to a month. Follow the trade using a combination of stop loss and candle stick reading. Sometimes drawing Darvas boxes.
Only trade stocks with a ROE above 10%, and paying dividends. Happy with any capital gain above 10%, and usually hold until a dark cloud or engulfing candle appears.
Not interested in investing or long term holds.
For me it's the game that counts, and my prime objective is preservation of capital so that I can stay in the game.
Have bought some NVT yesterday, think it's a good short term proposition.

Re: NVT - Navitas

Noddy said:

Thank you for your response.
So do you think NVT is cheap, expensive, or fairly valued at around $3.82.
I think it's expensive, but based on 2010 trading levels, I think it's a good buy.

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expensive or cheap is up to individual, I have a formula I use which I don't like to disclose, no point using it if everyone use the same thing

no competitive advantage on my part if everyone use the same thing I use , that why I get into stock other people run or stay on the side line...

It's not the best but it's the best I can come up with based on my judgment
and it works so far pretty well for me so I keep close to my chest....

I use the same one on every stock depend on my understand of the business
once the business is understood, it pretty easy for me to work out a price tag...
I always work on a ball park figure but never a precise figure because nothing is certain in life

my calculation on this stock a couple years at PE 20 and I still buy, stock since then deliver a 100% or more return on capital plus 60% increase in dividend...

cheap or not I did state I bought a fair bit more at $3.70 ..time will tell...

other people think it's extensive and it's fair enough they get no argument from me...each has their own method and that what makes the market...

Good luck and this is one of many stock that give me a lot of conform during GFC with their ever increase in dividend payout and keep me FOCUS

and I wont complain with an extra 8% pay out this time around either.

Re: NVT - Navitas

frankbaozhu said:

I would suggest you not use any models like DCF analysis for investing. Mr. Buffett never used excel sheet or projections to arrive on intrinsic value on an investment, and neither should we. Investing is never a precise science. When you have enough experience, you will know something is cheap or expensive or fair-valued. It is a delicate balance among quality, statistics, risk/reward, people, etc. and you know it on the spot.

Over the years I have grown to be more suspicious about models, especially those ones from the academic world. If I relied on a model like DCF to value stocks, I would have missed lots of good ones. My recommendation is to read Mr. Munger's book: Poor Charlie's Avalanche. It discussed extensively about models. I can't find a better book to address the problem.

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No argument from me there, you sum it up pretty well

when I start out I am fairly fixate on how much a stock price, over time, with dozen and hundred of books under my belt, things change for the better and come up with my own calculation and judgment...

these days pretty relax, don't care if the market crash, or gold will hit $2000 a pop
or worldly events ... dividend keep coming in, portfolio rise and fall every day and one thing that I cannot do without is a nice cup of coffee each morning at the local shop.

time to hit the sack and turn on the kindle and finish Talent is overrated book.
and keep on that Deliberate practice on investing...

Re: NVT - Navitas

ROE, we are in the same old school

I like NVT, but passed because I found better ones to buy. It is surprising that you did not find this little company considering your scope in the AU market. The name of the company starts with a "F".