RXP Broker Data, page-39

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ZMan

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06/07/17

19:33

Post #: 25713093
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Originally posted by mal85 ↑

@xmanrocks
Agree with the undervaluation.
I do disagree about overpromising- they really missed guidance at the December half year 18 months ago and were absolutely punished for it. Regal took advantage and traded in and out at a big profit at the time- what seems like one of their few profitable moves last FY.

I think the market is mainly concerned about the ability to continue to grow earnings organically as previously growth has been acquisitive and no major new acquisitions recently and I think as usual is being extremely short sighted.

Typically there are cycles of acquisition --> bedding down and optimizing synergies --> excess FCF --> capital allocation decisions for continued growth and we are currently in a transition period. I do think FCF conversion is very important here and will be looking closely at the results make sure last years full year results were not abnormally good.

This is one of very few stocks on the ASX with a low earnings multiple, growing revenues and growing dividends - which if it persists will inevitably lead to both earnings growth and PE expansion which you have alluded to above. I think it can support a PE greater than 18 if current rates continue...

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Maybe you mean the Dec half 2.5 years ago, Dec 2014.
They issued a profit downgrade in Dec 14, only 6 weeks after confirming guidance.
The share price dived at that time and can clearly be seen on the charts.
I think many are still finding it difficult to trust management.

Last edited by ZMan: 06/07/17

RXP Price at posting: 79.5¢ Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

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RXP Broker Data, page-39

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