Pinned valuation:
RPM reported this evening and it was good:
We are starting to see the benefits of the transition from selling contracts as a one-off, to a SaaS model.
It takes a few years for the waters to clear and the true picture to emerge.
The slide showing financial guidance for NPAT demonstrates it best.
They have a habit of under-promising, but if we take the full year NPAT to conservatively be $17m that should give an ROE of ~30%.
Using McNiven's formula using a required return of 10%, gives a valuation of $2.43.
If we assume they over-deliver and beat guidance, say $20m, using the same required return of 10% you can get a valuation of $3.31.
Happy holder.
mikebrisy
@Chagsy - just crunching through my analysis now. Here are a couple of trend charts.
My only bug bear, is that I half wish they were investing in developing the platform rather than buying back shares. ALL the great tech companies spend a lot on R&D (just look at $WTC, $TNE, $ALU (sniff), without even mentioning the US giants).
But on the other hand, you can admire the capital discipline, and if they ever wanted to raise, I would support management in a heatbeat.
First chart shows the HY financial trends. The cost control is admirable, and it drives the leverage. Will it continue?
In the next chart I've zoomed in on the bottom line.
As you may know, I prefer plotting cash trends as well, but $RUL is all over the place, as payments are heavily weighted to H2.
@Chagsy I am in the ballpark on your valuation and thinking about increasing my RL position here.
The drivers of today's result have been well signalled in the trading update and also the quarterly, so I'll not repeat.
Wrapping up for the day. MrsMikeBrisy has cracked open some pink bubbles to cheer $ALU.
Disc: Held in RL and SM