SIQ - Smartgroup Corporation

[Dona Ferentes]

Up until around 6 ? years ago or so, I and wife were customers of TPG for mobile phone and internet.
At the time, they were using Optus as their carrier.
With little notice, they changed carriers and used Vodafone instead.
Service became woeful in our area and in general also elsewhere that you would expect reasonable service...
Our mobile phones were confirmed to be fine to work on Optus bands not Vodafone.

Good way to lose customers TPG....

wrong TPG

this is Private Equity.

TPG is a global investment firm with $108 billion in assets under management. We are headquartered in Fort Worth, Texas, with senior executives based both in Fort Worth and in San Francisco, California, and other principal offices in New York and across Asia, Australia and Europe

 

[frugal.rock]

wrong TPG

this is Private Equity.

Thanks Dona.
I meant TPG... i think is Total Peripherals Group.
Phone and internet mostly.
My bad. Please ignore.
?

 

[aus_trader]

Thanks Dona.
I meant TPG... i think is Total Peripherals Group.
Phone and internet mostly.
My bad. Please ignore.
?

Not to worry @frugal.rock it's easy to mix up TPG Telecom Ltd (asx: TPG) with TPG Global Private Equity vultures.

 

[aus_trader]

I am sure most of the shareholders would have been aware of it and it was also the subject of a Livewire article which appeared in the Iress list of SIQ market announcements. The fact that I have a personal dislike of TPG doesn't mean I should try to influence others who may have had the same view as Montgomery in the Livewire article and wanted to hang on. Also, the fact that Aware Super was involved should have given it a greater chance of success. My reason for selling was a personal assessment of the risk.

Smartgroup Corporation (ASX: SIQ)​

James Marlay: Staying with you, Simon. Smartgroup - the yield was looking a lot more attractive at the beginning of September. It's subsequently received a bid and the share price has jumped nearly $2. Are you a buy, hold or sell on Smartgroup?

Simon Conn (SELL): Controversially, I am a seller of this business because we have seen TPG and many other private equity firms approach companies and then not proceed with the bids. So this is an approach by TPG. It's conditional and non-binding. And so I think there are questions around whether they execute that. And look, we own SG Fleet (ASX: SGF) in the fleet leasing market. It's trading on 15 times and has a 4.5% yield. We much prefer that business - it's better value and I think really well-positioned going forward with its technology platform that they are putting in place to improve their service offering for their customers.

James: Roger, Smartgroup. Is it a buy, hold or sell for you?

Roger Montgomery (BUY): I am going to stick my neck on the block and go the opposite way to Simon. I think it's a buy. It is under takeover as Simon mentioned. I am always interested in what we call post-announcement arbitrage opportunities. And there is still a 12% gap here. I actually think this deal proceeds. In fact, I think the strength of the initial bid, being granted exclusivity, and Aware Super indicating that they will participate in the proposal as an equity co-investor shows the intent to complete. But that's just my view. The discount exists because a few deals have recently fallen over, as Simon mentioned. I think this is a simpler business, it's got a cleaner balance sheet. There is always a risk that a deal as highly conditional as this one doesn't complete, but I back this one going through, so it's a buy.

You are right @Country Lad , if a well respected analyst like Roger Montgomery couldn't predict correctly which way this would go, it's quite possible that it could have gone the other way as well and got bid up with higher offers especially when a Super fund is in favour of the deal.

It's actually trading at a heavy discount to the current offer, so could even go higher.

 

[Country Lad]

It's actually trading at a heavy discount to the current offer, so could even go higher.

or maybe we are back to where we started where I said

The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most
certainly is of the view that there will not be a better offer to follow.

I am not in the least tempted.

 

[aus_trader]

or maybe we are back to where we started where I said

The fact that the current price is about 13% below the offer price indicates the market is not confident the deal will occur, and most
certainly is of the view that there will not be a better offer to follow.

I am not in the least tempted.

Looks like you've had the predictions right from the start on this one @Country Lad

SIQ is pretty much back to pre-Takeover price now...

 

[finicky]

@divs4ever your kind of company? In addition to lavish dividends it mostly delivers high ROE (I get median 21%) on a rising trend of book value. Seems low capital intensity. Looks pretty close to fair value to me - definitely one more for my crash list.

Dividend History:

 

[finicky]

Now significantly lower @ 6.20
Last week announced loss of a client and downgraded 1H 22 EBITDA guidance.

Not Held

 

[finicky]

Down another 5-6% today.
I don't understand to any meaningful extent the workings of salary packaging, novated leasing and whatever else they do but it's been pretty profitable since listing. The lowest ROE years were still 17%, the rest were low 20s%. The shares issued are nice and low. They've delivered heaps of dividends. All that's worth at least 3x book value to me and it now just under 3x.
How will this sort of business be affected by a deep recession though, since it rests on employment? Macmillan's (MMS) share price has been plunging too - company of the same species. They don't seem to have a 'moat' since when I googled 'novated' I came across a very descriptive online version: novatedleasing.com.au

Not Held

 

[finicky]

Back to 6 bucks, down 12% early in trading but the June Half Qtrly just announced doesn't seem too bad.
They have disclosed headwinds in wage inflation, client slowness due to interest rates and tight supply of vehicles.
Normal dividend which must be about 6% full year? Doubt I'll buy though due to other interests.

Not Held

 

[finicky]

SIQ intraday down a few cents @ 6.62
SIQ goes ex dividend tomorrow (Mar 8). Div is 29c ff.
I think I'm getting a reborn interest in short term moving average crossovers combined with any suggestive resistance level, bullish candles or patterns. Was just looking back at the CDA daily chart on the same theme (20 over 50 dmas)
All in hindsight of course but a buy at around 5.50 might have been a reasonable bottom trawling bet using this approach?

Not Held

Weekly

 

[finicky]

SIQ @ $8.67
Has really been cranking but might well be due for a pullback due to this week's higher volume 'dark cloud covering' candle occurring at the level of the previous high.

Not Held

WEEKLY

 

[finicky]

Smartgroup at an interesting level. Has returned toward the $9 main resistance level of the high made a few months ago and also the high made back in mid 2022 (not seen on this 1 year chart) There was a brief false break of $9 at the previous high. Now it looks like its flagging for another push but I can't see the justification on valuation grounds - which I see as around 4x book value, with no safety margin, bringing it to about the current price.
Also the half yearly published in June is not suggesting rampant growth as ebitda was down on pcp, NPATA more so.

Not held

DAILY

 

[finicky]

I won't be buying, but always interested in what Philipp Hofflin is favoring after his great contrarian call on energy, WHC and WDS around 3 years ago. Off topic, but I imbedded that old clip below.
Responded by picking SIQ on livewire for the topic of companies facing a catalyst in 2024.

Not Held

Note: ~3 years old clip