Chart Update, page-859

I agree with what you wrote. To be cautious, I have written about an EPS of 16c, but I thing 17c is most likely. Because of the cash flow being abnormally good for the reasons that you mentioned, NWH can grow a bit quicker in the short and medium term, so 19c for FY20 is reasonable in my book, and one may as well say 21c in FY21.

If one thinks about all the metrics that make up the guesstimate of a target price, one should think of the numbers used as being proxies for a range of probabilities. This makes the valuation fairly stable, because if on is reasonable, the errors of each proxy number would tend to cancel each other. Thus Revenue can grow more aggressively, but that may require borrowing, which increases expenses (hence NPAT margin) and risk (hence lower PER). Because I always assume tax as 30%, could just as easily have used a Gross Profit margin, and then deducted tax, but that serves no useful purpose.

We have many months to wait to see what happens in FY19.