I am looking for closer to $15.00 last year December it got 14.45 on Dec 6. I dont think that overall the news is much better so as I am expecting some pain in TPG in the short term I expect bargains may well arrive in the next year. I ( the only time in my investing life to get it right) bought in more TPG the day before the results took around 7.6% profit and then decided to stay away the next day after it fell.
I think its a great buy for 2020 ( TPM) but really to get there its got to take pain. I think they SOL are already looking to lower dividends from TPM in their mix so I expect current dividend levels are sustainable. I still think that BKW and NHC will hold up the dividend flow - I am always concerned about dividend flow as its way over done here in OZ. There are times when you have to go back into an investment cycle mode but really the shareholders want their dividend. So I looked at TPM reducing their dividend to a token 4c for the year. and estimating PCG @7.5c. That would at the current dividend levels suggest they could have a shortfall in cash flow of around $20 million but they just sold two property projects which yielded that.
So my view is that the 54c is probably doable for the next year at l;east and probably for another as well. The Balance sheet shows more cash on hand but I checked and $90 m of that increase is in NHC but that still means there is another $90 million and its not in BKW so I suspect its on their own assets. So in reality I am no longer concerned about the sustainability of the dividend.
In looking at an investment in BKW vs SOL I have also been buying BKW rather than SOL due to what I see as a relative discount to underlying assets.
That discount was very different when TPM was valued so much higher. However you have to look at what TPM can fall too these days so I got happier with BKW around the $13.00 mark. I am not sure I want any more SOL until I can see TPG results and unless I can get BKW below $13.00 I am unlikely to want more.
I have done sensitivities on TPM shares and this is still a fair investment even if the share price drops to around $3.60 for TPM. However what does concern me is that underlying valuation if TPM cannot get its mobile network in budget and doesnt start to deliver on the promise.
That forced me to look at 5G and its implementation and what it could mean for SOL and TPM.
This was my analysis :
NBN has a flaw in that its now a system that is many different hybrids. You then have the difficulty of your ISP and then the NBN - so 2 possible entities letting you down. I have had personal experience of people struggling to get problems resolved.
5G really removes the issues as you dont have to lay cables and you can use different methods to backhaul the data. The 5G speeds that can be achieved should be better than the FTTN 25. I am led to believe from my research that all 3 mobile players have tested it. Telstra wont say what was achieved but will do more at the commonwealth games.
So the first problem is that the bandwidth for 5G is going to be expensive and if its the 3.6ghz there are present users in that space.
However what I do like is that the 5G speed should keep most users happy. That should stop the continuous investment and give you a reasonable lifespan.
What 5G does is bypass the NBN. So you no longer have to rely on the aged copper on FTTN and it puts the destiny back in the business hands rather than a government company.
So yes after much discomfort I believe that Teoh has made the correct decision. The sadness is that its going to cost a lot of money to be able to get control of your earnings again. Maybe they should have gone after Vodafone 3 years ago. Who knows.
The player I see getting pasted is Telstra - I have to use them - rural copper. Next year fixed wireless nbn and guess where I will be going. I dont think people understand how dissatisfied you can be at Telstra but still have no real choice. Foxtel - well outside of sport who cares these days.
Really for me live streaming and paying for what I want is really the way to go for me. Haven't watched a foxtel movie for a couple of years.
So in a nutshell - I really would like 5G - it is the ultimate convergence. My plan covers all my data needs and I don't have to worry about copper etc. I can then have 1 relationship supplying me the pipeline. Then I can go and buy the services I want to use.
The ISP is then your telco , your mobile and probably your basic entertainment supplier to which you add what you want...
So yes I think it will work:
Some big issues.
1. TPM has to get spectrum to be able to get this plan off the rank.
2. I dont know whether there will be overruns on budget.
3. Could be a few painful years. The transition could see a huge writedown of our investment in TPM.
4. Will the government not seek to get a return on their boat anchor by just legislating to charge the ISP anyway whether they use the NBN or not.
5. How will Telstra respond to no longer being in control. Do they become a better competitor.
Then we have to look at coal and hope that reality of affordable electricity becomes real and we dont go down Mr Jones anything but black route.
Maybe the politicians should look at the share price graph of AGL - you only have to go mack to 2012 to see where the money has gone and why they probably don't want to keep coal and want to have renewables and a greater capital investment that has to generate a return...
My bet is that NHC will continue to produce and sell coal and despite the NEW Ackland 3 maybe not going ahead I think it will keep delivering profit. What I dont understand is the Bridgeport investment. Besides the write-offs I don't think its ever made a profit.
Overall I am a happy holder but there are a few clouds and we have to weather a few storms into the future.
Tinwins or others anything you can add?
SOL Price at posting:
$16.16 Sentiment: None Disclosure: Held
(20min delay)
