NVT - Navitas Limited
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Re: NVT - Navitas
I have continued to decrease my hold in NVT but today's "status" announcement of a likely move into the top 200 stocks seems to have given the SP a nice boost.
I am not sure but suspect this means that the stock will become one of more interest to institutional investors.
Rick
I have continued to decrease my hold in NVT but today's "status" announcement of a likely move into the top 200 stocks seems to have given the SP a nice boost.
I am not sure but suspect this means that the stock will become one of more interest to institutional investors.
Rick
Re: NVT - Navitas
you should sell them after march if you want out ...
once it in top 200 in march, fund that are based on index are force to buy this stock driving price even higher
I still hold, I did bought more at $3.70 a while ago .... their investor relation is real good ... I have some question for them which I cant find in annual reports... and they came back with answer the next day ..that pretty much cement my faith in them for more
you should sell them after march if you want out ...
once it in top 200 in march, fund that are based on index are force to buy this stock driving price even higher
I still hold, I did bought more at $3.70 a while ago .... their investor relation is real good ... I have some question for them which I cant find in annual reports... and they came back with answer the next day ..that pretty much cement my faith in them for more
tinhat
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Re: NVT - Navitas
I obviously got the wrong receptionist on the phone when I called their corporate office last year. I asked for Investor Relations and she said they didn't have one and told me the company secretary would call me back which they never did!
This is interesting news. I find that NVT is a hard business to value based on fundamentals. Unusual business structure, very low tangible assets generating very hight ROE. High PE. The share price is based on yield more than any thing else as far as I can tell.
I bought a small holding as a defensive/income stock to put into the portfolio. This was before they announced their recent acquisition and subsequent debt and equity raising. I was planning to get out at 4.40 but this news of its potential inclusion in the S&P 200 might make me hang on a bit longer and aim a bit higher.
Thanks for the info.
you should sell them after march if you want out ...
once it in top 200 in march, fund that are based on index are force to buy this stock driving price even higher
I still hold, I did bought more at $3.70 a while ago .... their investor relation is real good ... I have some question for them which I cant find in annual reports... and they came back with answer the next day ..that pretty much cement my faith in them for more
I obviously got the wrong receptionist on the phone when I called their corporate office last year. I asked for Investor Relations and she said they didn't have one and told me the company secretary would call me back which they never did!
This is interesting news. I find that NVT is a hard business to value based on fundamentals. Unusual business structure, very low tangible assets generating very hight ROE. High PE. The share price is based on yield more than any thing else as far as I can tell.
I bought a small holding as a defensive/income stock to put into the portfolio. This was before they announced their recent acquisition and subsequent debt and equity raising. I was planning to get out at 4.40 but this news of its potential inclusion in the S&P 200 might make me hang on a bit longer and aim a bit higher.
Thanks for the info.
Re: NVT - Navitas
Numbers are down it appears. Can the SP hold up I wonder?
[No longer holding]
Numbers are down it appears. Can the SP hold up I wonder?
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Re: NVT - Navitas
From what I can see, Navitas paid way way way too much for SAE. That combined with tough operating restrictions may see the awesome fundamentals of this one start to deteriorate of the next couple of years. Will be watching over the long term...but with the price paid for SAE I can't say I have full confidence in management.
I do note that I did not look into the acquisition completely and could be missing something vital.
From what I can see, Navitas paid way way way too much for SAE. That combined with tough operating restrictions may see the awesome fundamentals of this one start to deteriorate of the next couple of years. Will be watching over the long term...but with the price paid for SAE I can't say I have full confidence in management.
I do note that I did not look into the acquisition completely and could be missing something vital.
Re: NVT - Navitas
robusta, this all made good sense to me
except Navitas doesn't really look like a bond - according to Commsec it's grown earnings 30.9% in 1 year, 7.6% over 5 years, and 2 year forecast is 12.8%.
And dividend growth over 5 years of 17.5%.
Someone cleverer than me will explain how this is done with a payout ratio of about 100%.
Warren Buffet said "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return"
NVT does have a high rate of return of invested capital (ROE= ~61%) but it does not have the ability to reinvest that capital to give shareholders the value of compounding. (look at the payout ratio for the last 5 years, 107%, 100%, 101%, 100%, 104%.)
This to me makes the business worth less than a business with a lower ROE but also ability to retain capital (lower payout ratio) and maintain a satisfactory ROE on that retained capital. This sort of business becomes a "compounding machine" delivering strong capital growth with dividend growth to follow in due course. eg COH, CSL, FGE, MCE, FRI...
To do a quick back of the envelope valuation of NVT we can treat it a bit like a bond due to all the profits being paid out.
My required return is 10% (to compensate me for the risk of investing in equities)
NVT share price is about $3.70
Dividend yield = 5.2%
To achieve my RR of 10% need to pay no more than $1.85 - would prefer to pay a whole lot less so I have a margin of safety.
There goes another stock that does not tick all the boxes for me, the search continues....
robusta, this all made good sense to me
except Navitas doesn't really look like a bond - according to Commsec it's grown earnings 30.9% in 1 year, 7.6% over 5 years, and 2 year forecast is 12.8%.
And dividend growth over 5 years of 17.5%.
Someone cleverer than me will explain how this is done with a payout ratio of about 100%.
Re: NVT - Navitas
its business model required very little capital for expansion ..so it can pay out 100%
and fund expansion from cash flow with ease...
I think I post on here a year or two ago, it probably one of the best business model
I ever seen combine with the Asian appetite for education you have one hell of a cash cow business
Talk about Asian demand for soft commodity and raw material..they place even more emphasis on education but not many people know that
And to answer robusta why do you need to reinvest the capital when there is no need for it? its model is clearly far more superior to other because for FGE to make more money it need to reinvest that cash to buy new machine and equipment ...NVT can do it without re-investing the capital ....so share holder profit both way, capital appreciation and bigger and better dividend each year
I cant find better business model
its business model required very little capital for expansion ..so it can pay out 100%
and fund expansion from cash flow with ease...
I think I post on here a year or two ago, it probably one of the best business model
I ever seen combine with the Asian appetite for education you have one hell of a cash cow business
Talk about Asian demand for soft commodity and raw material..they place even more emphasis on education but not many people know that
And to answer robusta why do you need to reinvest the capital when there is no need for it? its model is clearly far more superior to other because for FGE to make more money it need to reinvest that cash to buy new machine and equipment ...NVT can do it without re-investing the capital ....so share holder profit both way, capital appreciation and bigger and better dividend each year
I cant find better business model
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Re: NVT - Navitas
I too like the NVT model, but what did you think of the price paid for SAE, ROE?
far too much in my opinion...
I too like the NVT model, but what did you think of the price paid for SAE, ROE?
far too much in my opinion...
Re: NVT - Navitas
On the face of it i think they paid a fair price maybe toward the upper end but i wouldnt say over paid
What they paid for most of that in education license which is very hard to acquire
This should build them a bigger moat.
They paid $294 for 33m earning close to 9 times ebitda it isnt too expensive compared to similar corporate take over
It could proved expensive or cheap and we wont know until a couples of year time but right now based on projected earning i say it is an ok buy
On the face of it i think they paid a fair price maybe toward the upper end but i wouldnt say over paid
What they paid for most of that in education license which is very hard to acquire
This should build them a bigger moat.
They paid $294 for 33m earning close to 9 times ebitda it isnt too expensive compared to similar corporate take over
It could proved expensive or cheap and we wont know until a couples of year time but right now based on projected earning i say it is an ok buy
Re: NVT - Navitas
Problem is that this announcement was based on a period when the $A was lower. At its recent level I would anticipate further decreases in student numbers -- and the answer can't be in just increasing fees again.
Much is now dependent on the overseas markets -- but fair value is now looking lower than the current SP imo.
Rick
[No longer holding]
Problem is that this announcement was based on a period when the $A was lower. At its recent level I would anticipate further decreases in student numbers -- and the answer can't be in just increasing fees again.
Much is now dependent on the overseas markets -- but fair value is now looking lower than the current SP imo.
Rick
[No longer holding]
McCoy Pauley
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Re: NVT - Navitas
I must admit that I only briefly scanned through the report when it was released, but it also seems to me that NPAT was boosted by an acquisition NVT made during the past financial year. IMHO, you need to account for that acquisition before comparing it with previous performance.
I must admit that I only briefly scanned through the report when it was released, but it also seems to me that NPAT was boosted by an acquisition NVT made during the past financial year. IMHO, you need to account for that acquisition before comparing it with previous performance.
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Re: NVT - Navitas
Anyone looking at this stock?
Share price has been beaten down to near 52-week lows (nice rally on Friday though). Good dividends (6.2%), still high P/E, and company expects headwinds for fiscal 2012 but better times beyond by fy 2013 due to policy changes.
I may probably jump in on a dip - education is a bullet proof sector and something people well throw the kitchen sink at to get.
Anyone looking at this stock?
Share price has been beaten down to near 52-week lows (nice rally on Friday though). Good dividends (6.2%), still high P/E, and company expects headwinds for fiscal 2012 but better times beyond by fy 2013 due to policy changes.
I may probably jump in on a dip - education is a bullet proof sector and something people well throw the kitchen sink at to get.
McCoy Pauley
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Re: NVT - Navitas
Agree with this, to an extent, but NVT's business model in Australia relies upon government regulations which, at any time and from time to time, may change depending on the whim of who is at the controls. Tightening student visas, increasing fees for education and other issues may make it more expensive (and therefore more difficult) for overseas students to come to Australia.
Then there is the issue of the high Australian dollar discouraging overseas students from attending Australian education institutes in preference for institutes in other jurisdictions.
NVT has wisely diversified its portfolio geographically, but there's no doubt it makes the bulk of its money from its Australian operations.
I've looked at investing in NVT a few times over the past 18-24 months but something has always held me back, and it's the issue that NVT plays in a market that is subject to governmental whims. There are other examples on the Australian market that show that share market returns can be muted when the government gets involved.
Agree with this, to an extent, but NVT's business model in Australia relies upon government regulations which, at any time and from time to time, may change depending on the whim of who is at the controls. Tightening student visas, increasing fees for education and other issues may make it more expensive (and therefore more difficult) for overseas students to come to Australia.
Then there is the issue of the high Australian dollar discouraging overseas students from attending Australian education institutes in preference for institutes in other jurisdictions.
NVT has wisely diversified its portfolio geographically, but there's no doubt it makes the bulk of its money from its Australian operations.
I've looked at investing in NVT a few times over the past 18-24 months but something has always held me back, and it's the issue that NVT plays in a market that is subject to governmental whims. There are other examples on the Australian market that show that share market returns can be muted when the government gets involved.
Re: NVT - Navitas
Not the best year for NVT, Strong Australian Dollar. Gov’ts messing with student visas which they have subsequently had to rethink. Bedding down a major acquisition and the word is in a bit of a funk over Euro Debt. Pretty safe to say the business is not enjoying cyclical high conditions and the share price is reflecting that as it has been in decline since March last year.
I have a long term position in NVT and I have been adding to it in the last few weeks. The reason has nothing to do with the above paragraph – that is just short term noise to me.
My reasoning goes along these simplified lines.
One of the things the West can actually do better than the developing countries is tertiary education. The traditions, the institutions the reputations and the environment in which the academics want to live are all going to take a long time for the developing countries to replicate. Spending on education increases as wealth increases and this is one avenue that the west has of tapping the wealth creation occurring in the developing parts of the world. I suspect that education will grow faster than GDP in developed countries by continuing to attract foreign students.
NVT is leveraged to this growth outperformance macro picture and best of all the business model requires little to no capital to facilitate the organic growth, leaving all funds earned to be distributed or invested in buying new business.
NVT’s current franked up dividend yield is around 9% and that is based on a rather average sort of current environment for the business. The macro picture over the long run should see the earnings grow above CPI and because of its low capital intensity model the dividend should grow at the same rate.
With a down trend in place this stock may be no good for anybody who requires immediate gratification from there share purchases. But for me, If I only had the choice of NVT or a 2030 CPI Indexed bond and they both yielded the same, I would still choose NVT because I expect their growth over 20 year period to exceed CPI. When NVT offers a 9% yield and the indexed bond offers 1.8% it becomes a no brainer.
Even if NVT does no better than match CPI (whatever that turns out to be) over the next 20 years the dividend yield alone will see a real return of $46K on a 10K investment. The CPI indexed bond yield over the equivalent time will be a real return of about 4K on a 10K investment. If the market comes to appreciate my preference for the NVT yield over the Indexed bond then there is the opportunity for capital gain. If it doesn’t or marks the price down even further then the re-investment rates available on the dividends will produce the return.
Of course if I’m wrong about the business the dividend yield will fall over the long term and I will not make the sort of returns that I envisage.
Not the best year for NVT, Strong Australian Dollar. Gov’ts messing with student visas which they have subsequently had to rethink. Bedding down a major acquisition and the word is in a bit of a funk over Euro Debt. Pretty safe to say the business is not enjoying cyclical high conditions and the share price is reflecting that as it has been in decline since March last year.
I have a long term position in NVT and I have been adding to it in the last few weeks. The reason has nothing to do with the above paragraph – that is just short term noise to me.
My reasoning goes along these simplified lines.
One of the things the West can actually do better than the developing countries is tertiary education. The traditions, the institutions the reputations and the environment in which the academics want to live are all going to take a long time for the developing countries to replicate. Spending on education increases as wealth increases and this is one avenue that the west has of tapping the wealth creation occurring in the developing parts of the world. I suspect that education will grow faster than GDP in developed countries by continuing to attract foreign students.
NVT is leveraged to this growth outperformance macro picture and best of all the business model requires little to no capital to facilitate the organic growth, leaving all funds earned to be distributed or invested in buying new business.
NVT’s current franked up dividend yield is around 9% and that is based on a rather average sort of current environment for the business. The macro picture over the long run should see the earnings grow above CPI and because of its low capital intensity model the dividend should grow at the same rate.
With a down trend in place this stock may be no good for anybody who requires immediate gratification from there share purchases. But for me, If I only had the choice of NVT or a 2030 CPI Indexed bond and they both yielded the same, I would still choose NVT because I expect their growth over 20 year period to exceed CPI. When NVT offers a 9% yield and the indexed bond offers 1.8% it becomes a no brainer.
Even if NVT does no better than match CPI (whatever that turns out to be) over the next 20 years the dividend yield alone will see a real return of $46K on a 10K investment. The CPI indexed bond yield over the equivalent time will be a real return of about 4K on a 10K investment. If the market comes to appreciate my preference for the NVT yield over the Indexed bond then there is the opportunity for capital gain. If it doesn’t or marks the price down even further then the re-investment rates available on the dividends will produce the return.
Of course if I’m wrong about the business the dividend yield will fall over the long term and I will not make the sort of returns that I envisage.
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Re: NVT - Navitas
Seems like things haven't improved much in the industry. A 20% fall in new student applications.
http://www.abc.net.au/news/2012-01-...mbers-down-again-industry/3774858?section=nsw
I like NVT and I do think education is certainly a "growth" industry as the middle class in developing countries expands. With the current headwinds though, 15x earning seems a bit steep. It will be interesting to see their interim results next month.
Seems like things haven't improved much in the industry. A 20% fall in new student applications.
http://www.abc.net.au/news/2012-01-...mbers-down-again-industry/3774858?section=nsw
I like NVT and I do think education is certainly a "growth" industry as the middle class in developing countries expands. With the current headwinds though, 15x earning seems a bit steep. It will be interesting to see their interim results next month.
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Re: NVT - Navitas
EPS down fractionally. CY11 EBITDA for the SAE business is $3.2m lower than 2010.
The visa troubles in Australia (which should have some resolution this year) are being played out in the UK as well, which is affecting their operations there.
This is one I'll keep watching but won't consider at these levels.
EPS down fractionally. CY11 EBITDA for the SAE business is $3.2m lower than 2010.
The visa troubles in Australia (which should have some resolution this year) are being played out in the UK as well, which is affecting their operations there.
This is one I'll keep watching but won't consider at these levels.
