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BYI - Beyond International

Discussion in 'Stocks 0-H' started by Klogg, Sep 19, 2012.

  1. Klogg

    Klogg Well-Known Member

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    Didn't see a thread on this company, so I thought I'd start one.

    BYI basically produce and distribute their TV productions to Australian and US broadcasters, as well as having their fingers in digital advertising and home entertainment.

    From a value perspective, I found the following:
    - Trading at 6*P/E, and < 4*cash flow (XD at the moment)
    - No bank debt
    - ~6mil in Cash
    - Good client base both here and in the US
    - A good portion of their revenue is from overseas, so any drop the in AUD would benefit them nicely
    - Last year's results would have been similar to this year's, were it not for a 'significant one-off cost'
    - 7% unfranked yield
    - 20% owned by the chairman, 9% by the MD

    A major downside is that it's very thinly traded, so it's not for everyone... and a Market Cap of ~60mil.

    Has anyone else checked them out?
     
  2. Klogg

    Klogg Well-Known Member

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    Well, this one went nuts recently...

    My entry point of 82c (used in my metrics above) in hindsight seems to have been a sensible position - touching $1.20 now.
     
  3. Klogg

    Klogg Well-Known Member

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    And it's off again... Profits up 17% for the half, forecast to increase profits by 10-15% for the year. Still trading on a P/E of < 10...

    I can't help but think that if this company were more liquid, we'd see the Market Cap skyrocket.
     
  4. Vader

    Vader Well-Known Member

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    I bought into this recently (@$1.24) after it came up on one of my screens, my main concern is that their big cash cow (Mythbusters) may be getting towards the end of it's major money making life... they need to get another big hit tv show on their books to help take up the slack once Mythbusters eventually gets the axe.

    ...a few more solid seasons left in it yet though I'd reckon :)

    (ok, I know that's a bit over simplified, and they do have a number of different products, but I reckon Mythbusters is a good gauge to the overall position)
     
  5. Klogg

    Klogg Well-Known Member

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    I remember reading that Mythbusters is approximately 10% of the revenue for that particular section of the business.

    I'll have a look through and if I can find it again I will post it.
     
  6. Klogg

    Klogg Well-Known Member

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    Well, I'm replying to my own posts, but Motley Fool recommends:
    http://www.fool.com.au/2013/07/31/beyond-beyond-2000/
    (not that it means much to me)

    I've got an average of $1.05 on this, averaging up from my initial purchase of 82c... and it's my largest holding by a long shot.

    Will be interesting to see what the Motley Fool recommendation to such an illiquid company.
     
  7. ROE

    ROE Well-Known Member

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    I got this around 1.20ish TikoMike message me and ask and I spent a bit of time research ...

    Not putting my research to waste and the business is pristine in term of balance sheet and business model
    Game on so I took the position :D
     
  8. Klogg

    Klogg Well-Known Member

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    Agreed. At $1.20, you got it at about 8.5 * current earnings, and the balance sheet is debt free with cash of about $8mil. That's not mentioning the 17% profit increase in the 1H and guidance of 10-15% for the full year....

    AND the fact that it exports to the US and Europe! (The more the AUD drops, the better)
     
  9. ROE

    ROE Well-Known Member

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    Result look good to me nothing Stella but decent grow pace...

    9.6% increase in profit ...dividend up 30% compared the last year half
    EPS 15.7c ...Cash holding up nearly 20% to 10.8m
    at 1.70 it just above a PE of 10

    and the market push it down 9%

    No debt ..market must hate small strong balance sheet business that deliver decent grow :)
     
  10. Klogg

    Klogg Well-Known Member

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    Agreed - the numbers were good. And the positive FX impacts are yet to hit, as they actually made a paper loss on their existing hedging agreements.

    I do have a concern around the BeyondD business and it's continual poor performance... If what management write about 550k of cost cutting is true, it should start turning a profit - but I want to see it first.

    All things remaining the same, profits should increase 5-10% purely on FX gains.
     
  11. magicwand

    magicwand New Member

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    Given the run up the share price has had, this result well and truly deflated the party balloons. They committed the cardinal sin of falling short of their own half year guidance (10%-15%). EBIT for the year only grew 6.4% and their second half EBIT was actually down 6% on last year's ($5331m in 2013 versus $5672m in 2012). As well as that the CEO's commentary was somewhat flat/downbeat... "facing competitive pressures and technological challenges", losing a contract, FX losses (no indication of rosier days ahead) and no guidance for 2014. Didn't exactly inspire!
     
  12. ROE

    ROE Well-Known Member

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    BeyondD is new business division so I wouldn't expect too much from it ... I usually give new business 3-5 years to make it comes good.

    Their bread and butter is production, while thing is going well they can expand the business and take a hit here
    and there as long as it doesn't do too much damage to their balance sheet..
     
  13. Klogg

    Klogg Well-Known Member

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    Agree strongly on missing guidance... But only by 0.5%ish (can't remember exact figures). They expected 10-15%, made approx 9.6%.

    As for the language, I also thought that... However, there's nothing about losing a contract.
    And yes, they don't mention anything around FX gains, but logic tells you that over the medium to long term, it's beneficial. Given their EUR/USD revenues and a predominantly AUD cost base, it can't be bad.

    I'd expect profits to be largely flat, with gains only showing from a beneficial exchange rate environment... and hopefully a better acquisition during the year.

    Still, has everything you want in a long term company... Big cash holdings, good ROE, consistent management and no debt.

    Post edit:
    Also worth noting that in the 2010 Annual Report, the same language was used within their Conclusion/Outlook section... Yet underlying earnings increased substantially (+32.66%) that year. Of course, this was undone by the Magna Pacific write-off...
     
  14. ROE

    ROE Well-Known Member

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    I thought 1.70 is an Ok price for a business with exceptionally strong balance sheet, plenty of cash and reasonable earning and dividend at PE of 10 you virtually pay for no grow ..... any grow they delivered is a bonus...

    Any cheaper I may have to buy some more :)
     
  15. magicwand

    magicwand New Member

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    Yes guidance was almost achieved (albeit the low end) but a good chunk of that was due to paying less tax rather than increasing EBIT. As previously noted, EBIT actually declined in the second half. Regardless, missing guidance is a killer.... creates doubt and anxiety. Beating guidance provides certainty, confidence, optimism.

    The lost contract... see BHE: "The decline in revenue is due to the loss of the Entertainment One sales and distribution contract that was a major content provider to BHE in the prior year". How many more of these are in lurking on the sidelines? The "physical DVD market" going the way of the Dodo doesn't help the cause much either.

    The one thing you missed from "everything you want in a long term company" was the rather important attribute of strong growth. The bottom line is that the company raised expectations that it could be a little tiger growing 15% a year but only managed a pussy-cat EBIT growth of 6.4%. Even the monolith that is Woolworths announced EBIT growth of 7.2% today.

    BYI's result wasn't dreadful or even poor, it was just a little bit too insipid for the market and my liking. The CEO describing it as a strong result was also concerning i.e. doesn't it get much better than this? They might well go on and shoot the lights out in the coming year and beyond, unfortunately the numbers and tone of this announcement didn't encourage much optimism that this will be the case.
     
  16. magicwand

    magicwand New Member

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    If 1.70 is an okay price then why didn't you/why don't you buy more?

    With a company like this, growth isn't a bonus it's essential, otherwise what's the point? It's not like it's paying a fat fully franked dividend.
     
  17. ROE

    ROE Well-Known Member

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    I buy more when the time is right, I always know when to buy stuff at what price ...
    Ok doesn't mean the price I want to pay :D

    Let look at this way I trust these guys more than most just like Uncle Graham Turner in Flight Centre :)
    Uncle Simon in CCP, Uncle Don in Dominos

    The management is not out to deceived you
    most of their wealth is shares in this Company, there is no need for them to do trickery and get cheap
    share price movement....they will run the business so profit and share price is sustainable...

    with that I always entrust large sum of money to these guys :)
     
  18. Klogg

    Klogg Well-Known Member

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    I personally wouldn't pay 1.70, but I've loaded up on this sufficiently with a huge margin of safety ($1.05, PE<7). Nevertheless, I've outlined my reasoning for that in previous posts.

    As for growth not being essential, you're right. But the profit figures over the last 10 years, coupled with the previous "Outlook" statements lead me to believe that management are simply conservative, rather than warning of no growth.

    Of course, I could be wrong... But with the $10mil in firepower they have, I fail to see how they can't find another asset to purchase (preferably better than BeyondD - this so far is a failure IMO) to increase profits
     
  19. magicwand

    magicwand New Member

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    If you/I won't at 1.70 why should anyone else? But of course it could go off like a rocket and end up a lost 4-8 bagger. The price seems to be holding up well since the announcement. I bought into them a bit earlier than you so that probably influenced my decision to bail. I took the (very good) money and ran i.e. wimped out. I'm more than likely being way too harsh on them and yes I get the feeling that they will probably do well in the years to come. However to some degree I just lost confidence in the story. I probably pumped them up in my own mind too much in the first place. Here's an interesting take on the company from someone who sounds as if they've been close to the action.... http://ethicalequities.com.au/category/ethicalcompanies/beyond-international-asxbyi/
     
  20. Klogg

    Klogg Well-Known Member

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    Thanks for the link, magicwand. I have read that before and don't quite agree with a few things in there, but I won't go dissecting it... each to their own.

    More importantly, anyone have thoughts on the 7Beyond venture? I don't really know what to make of it, other than I hope they manage the expense side of this well...
     
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