Buy @ $0.82, $0.81
Finally decided to do something silly… buy at a much higher price… Managed to con-vince myself using Valuations as follows,
Target Yield = 6%
- Assume min 5ct Div
- Fm FY12, Div = 1ct/Q + 2ct in Q4 ie Total 5ct
- If 1-for-4 Bonus is approved, 1 share becomes 1.25 share
- Assume Div maintained (worst case) at 1ct/Q (no more 2ct in Q4) => 4*1.25ct = 5ct ie. min 5ct div is mainatined (for existing shareholders)
- => Assumption of 5ct Div for FY14 is possible in worst case after bonus issue (for existing shareholders) by reducing Div / Share ie reduce Q4 div fm 2ct to 1ct
- EPS from FY11 to FY13 (except Q413) = 0.35ct to 2.28ct
- Q413 EPS = 3.19ct
- Forward statement is positive for 1H14
- => 1H14 EPS easily 4-6ct ie 2-3ct / Q
- => Assumption of 5ct Div for FY14 is highly possible, even if 2H14 EPS drops to <1ct / Q
- => Target Price = 5ct (FY14 Div) / 6% (Target Yield) = $0.833
Comments
- Q114 results will be important as it'll give an indication if it is anywhere near Q413 = 3.19ct
- If so, then there could also be a very good possibility of an increase in Div Payout (could also be deferred till Q414 to cushion for any EPS drops in 2H14)
- Critical dates
- Next SEMI Book-to-Bill: April 21, 2014 at 3:00pm Pacific Daylight Time (PDT)
- AMAT Quarterly Results (23-May last year)
- UMS Quarterly Results (9-May last year)
What looked good were,
- P&L
- Q4 EPS 3.19ct (much higher)
- BS
- Cash = 8.5ct / share ; Zero Debts
- Biz Upcycle (at least till 1H14)..
- BB maintained at 1 or >1 since Oct-13 ; also Jan-13 to Jul-13
- Aug-13 = 0.98 ; Sep-13 = 0.97
- PE = 9.7 ; Yield = 7.975% (6.135% if Spcial Div excluded)
Take a bet… and my magic worked… prices started coming under pressure… 😀
References