I must admit that the results did not impress me, for the following reasons
Gearing is 33.5% - this is a bit high for me for a commodity business that has the additional risk of an environmental event. (TGR, IMO, is more risky than BHP or RIO)
ROA has reduced to less than 10% - the trend is going in the wrong direction. I am aware that the De Costi business has probably contributed to this, but with NPAT growth of only 8.2% (operating) vs a 9.5% reduction in ROA, one does not outweigh the other
Cash flow is not enough to support CAPEX and dividend. They had to borrow to pay the dividend.
Revenue grew by 40%, but raw materials and consumables grew by 53%
DRP has been reintroduced, indicating that there is concern with the bal sheet.
No guidance was given on CAPEX spend for FY17, which is also a concern as it feeds into the concern on FCF and the bal sheet gearing.
While I am happy to hold, I do not see me increasing my holding just yet.
HT1
TGR Price at posting:
$4.17 Sentiment: Hold Disclosure: Held
