$10, page-5

It is an impressive result, although it has to be given the high P/E that MTU continually trades at. Just like DMP and CSL it is expected to increase profits every half year.

By taking the mid point of their guidance - it is likely that the gains made in H2FY15 will be less than H1.


A -FY14 FY15e @+17.5% A- H1FY15 H2FY15 by difference H1 v H2 %
NPAT $67.1m $78.7m $38.5m $40.2m +4%
U NPAT $93.3m $109.6m $50.6m $59.0m +18%

Of the three segments only one increased revenue substantively - "consumer" by 17%.
"Wholesale" was static, and "Business" lost 3%.

The fact that both "Wholesale" and "Business" ended up with an increased segment profit means that significant cost compression occurred in H1FY15.

Companies with high (> 20 P/E) are reliant of revenue increases not cost compression to justify share price.

MTUs guidance is by the end of FY15, the current price will reflect a forward P/E in excess of 20.

The push for dividends for safer haven stocks have pushed the teleco sector quite a long way.

I am just wondering how long MTUs share price can keep rising? At what point does the "industry become mature"?

I am a long term holder and have set a HOLD sentiment, however will set an exit strike price.

Good luck to all.

PS if you use the underlying NPAT to generate the P/E it is a lot lower - maybe 16 - however this logic appears flawed.

Underlying NPAT and EPS figures each include an add-back of a non-cash cost of $12.1 million for amortisation for the half ($12.9 million in the previous corresponding period) associated with customer contracts acquired in the relevant period (in accordance with Australian Accounting Standards).

These costs must have been incurred - settled/paid in previous periods? Accounting standards require matching costs with revenue. As an aside, the magnitude of the gap is interesting.

I just got to time the market with an exit price.

Good Luck to All