Firstly, disclosure: I bought a parcel of TAH today for $1.025
Why, I can hear people wondering. Is he crazy? Hahaha, no. Not that I know of.
Well, let's see. Following the demerger from TLC, TAH has looked interesting, and cheap.
If we take a look at the 2022 AR, revenues from continuing operations are down 4.3% YoY. Additionally, we can't just ignore the fact that we have negative EPS for both 2021 and 2022. However, if we look at it purely on % terms, EPS albeit negative, has increased 27.4%. Moving in the right direction.
Now, current ratio is lower than I would really like with current assets being about half of TAH's current liabilities. However, the company did complete some debt funding in December 2022 for A$425M which is due to settle in March '23 (both 7 and 10 year notes were issued). This eases my minor concern regarding the above as the announcement referencing the debt funding is to be used to reduce existing indebtedness, among other things.
In 2022, dividends totaling 13c were paid to shareholders which gives TAH a dividend yield at the price I purchased for today of 12.68%. Now, we don't know if dividends will increase, remain the same, decrease or be cut all together. And, truth be told, historical dividend payments have not been... well, stable, to say the least. However, I am hoping with new management on board we can get some stability and good growth potential going here.
2022 FCF per share was 0.2025c, so technically speaking, TAH could sustain last years previous dividends totaling 13c and maintain a dividend payout ratio of 64.20%. Not outrageous at all.
And, here's the kicker for me. Enterprise value or EV, which for those unaware at home playing along is Market Cap + Total Liabilities - Cash and cash equivalents. Basically, the price to purchase the entire company, should you have enough money and the inclination to do so.
Market Cap: $1.04 * 2,225,700,000 = $2,314,728,000
Total Liabilities: $1,337,600,000
Cash and cash equivalents: $199,400,000
EV = $3,419,542,500
EV per share = $1.55
So that means that at current prices of $1.04, TAH is trading at a 32% discount to its 2022 enterprise value.
Bargain.