MFS - MFS Limited

[markrmau]

Hi, someone mentioned this one on another forum yesterday.

I ran my eye over it and couldn't see anything wrong with it. SP has been in downtrend after a number of aquisitions, but it may have good growth potential. The presentation released today looks good to me.

I am a bit margined out at the moment so was only able to stick $4k on it.

Note: the figures on commsec are rubbish - infact it took me a while to get an idea of thier financial postition.

Please do your own research etc.

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This could be a ...R

 

[el_ninj0]

Re: MFS - any opinions?

Hi, someone mentioned this one on another forum yesterday.

I ran my eye over it and couldn't see anything wrong with it. SP has been in downtrend after a number of aquisitions, but it may have good growth potential. The presentation released today looks good to me.

I am a bit margined out at the moment so was only able to stick $4k on it.

Note: the figures on commsec are rubbish - infact it took me a while to get an idea of thier financial postition.

Please do your own research etc.

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...........................................M
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This could be a ...R

I wouldn't be putting my money on any investment funds this year. Atleast not yet. Wait until we see what happens with the XJO is my opinion.

 

[markrmau]

Re: MFS - any opinions?

One of the directors seems to disagree and is loading up ($160k in last few days).

Just wait till the snow season begins and they start announcing earnings.

 

[markrmau]

Re: MFS - any opinions?

One final ramp before I go away and sulk.

The stochastic oscillator is giving a nice signal that a trend reversal is underway. The price SP made new lows yesterday which was not confirmed by the slow stochastic oscillator (see blue lines).

Remember that convergences/divergences are the ONLY valid buy/sell signals.

 

[RichKid]

Re: MFS - any opinions?

Hi Markmau,

This is not one for me, has convincingly broken the longterm uptrend and is clearly yet to show signs of reversing this steep downtrend. Has had some wide ranging days too so could be hard to set stops. Volume has picked up so that's a good sign, also good to see directors buying since March, only a small amount directly held but still better than nothing. Maybe they expect a rerating soon (or some special news), who knows, even directors get it wrong at times.

Sorry if this sounds negative, often better to take a small loss than a big one. Just my views based on my interpretation of the chart. The long term chart shows the slowing momentum and recent top followed by that dangerous gap down, no solid support nearby imo, maybe $1?? Wonder why it fell so steeply, was it increasing interest rates (would affect their large leisure property portfolio) or economic uncertainty affecting visitor numbers?? There is also the risk associated with the recent Peppers acquisition, might take awhile for things to smooth out. One thing I do notice from the chart is that around May/June of the last few years there has been a sudden spike, short lived so may be a good time to exit- is it the ski season effect as you mention??

I don't know much about indicators so don't know how accurate it is. Keep us posted on any recovery in the sp, currently at $1.28....

 

[markrmau]

Re: MFS - any opinions?

Well we wouldn't have a market if everyone agreed. Up slightly on high volume today, but I will agree that it is high risk. Someone wants to get out real bad.

 

[markrmau]

Re: MFS - any opinions?

Obviously, this got hammered along with all small caps over the last few weeks. However, it now seems to have broken out.... I will wait for end of day trading for confirmation, and perhaps cost average UPWARDS.

 

[markrmau]

Re: MFS - any opinions?

Keep us posted on any recovery in the sp, currently at $1.28....

Recovered somewhat

 

[robert toms]

I got into this one through the Breakfree takeover,and for me,hold a sizeable amount-just under 16000.This has,until now,probably been the most successful buy that I have made.
However they recently floated HFA,a funds management business,and invited shareholders to apply for shares in the float via a priority offer.
When I tried to get into the IPO I could not get a prospectus.Market link Services who ran the IPO claimed twice to have sent one to me,once by express post.(they could never provide me with the receipt no.for the express post)
My enquiries with Market Link Services and MFS have either led to no answers or prevarications.What I believe happened was that MFS got too much interest from the big end of town for the float,and after initially offering the IPO to small investors,withdrew the offer.
Interesting the trail of deception that you get along the way though.
The waterhole has been poisoned now and they can shove their floats.

 

[scsl]

Robert, I’ve got to agree with you on that…I bought Breakfree in December 2005, only to have it taken over a month later. MFS has since been my best performing company.

It’s a real pity though that Link Market Services weren’t able to send you a prospectus. I thought HFA had a pretty convincing future and applied for some shares. But due to an “overwhelming response from investors”, my priority offer application was scaled backed a fair bit! It seems the folks at UBS were able to do a pretty damn good job selling the IPO, enough for it to be “heavily oversubscribed”. It ended the first day at $1.39, a 26% premium over its $1.10 offer price.

Have you bought (or will you buy) HFA since it was floated? Since going down to $1.26 on the 30 May, it has rebounded to $1.55, 23% in less than two weeks! I missed out and am looking to buy next time it retreats…

I think that like MFS’ growth potential, HFA Holdings Ltd has enormous potential in the absolute return fund sector. Already a major player in this rapidly expanding sector, HFA is set to gain from the fast growing amounts of money pouring into the wealth management industry. The MFS Board, who have constantly under-promised and over-delivered, “remain committed to further growth in HFA and believe it has substantial ongoing prospects”.

HFA was acquired by MFS for approximately $3 million less than three years ago and is now worth more than $300 million. Through the IPO in which it retains a 38.7% holding, MFS has no doubt crystallised a massive profit which will mean more cash to pursue other opportunities – here’s hoping they find more of these HFA type investments!

As for the asset managing MFS, MD Phil Adams has likened it to a “mini-Babcock & Brown”, with a great deal of its earnings coming from management and performance fees from related investment vehicles such as MFS Diversified Trust, MFS Living and the PrimeLiving Trust. As it becomes increasingly known to the investment community that it has similar characteristics to Babcock & Brown, Macquarie Bank and Record Investments, MFS shareholders will definitely welcome further re-rating of the stock. UBS expects MFS to achieve a $A69 million net profit for the 2006-07 financial year, and its share price target for the stock is $5.05. MFS last traded at $4.08.

MFS and HFA are definitely worth having a closer look at…particularly MFS, which is down from its very recent record high of $4.51.

 

[robert toms]

Yes they certainly look to have good growth prospects.I looked to HFA when they dipped to $1.30,but I was half-hearted and missed that chance.MFS itself holds over thirty percent in HFA and that should see them reaping some rewards from HFA...if there are any of course....
There must be a lot of positive sentiment toward this sort of fund...HFA...because there are no results evident as yet to support this price...only what was in the prospectus.
I could not get a prospectus...market link services said that they sent me two ...the last one by express post.I was told twice that they did this,but they were unable to provide me with the receipt number.For some reason they wilfully misled me.I believe that they did this under instructions from MFS themselves....to reduce demand for the float.
As a consequence I have doubts about the integrity of MFS themselves...they are too successful to sell...but I will be watching them closely....maybe too smart by half this mob.I have been in the share game for fifteen years and no company has ever refused me a prospectus before...this mob did though.,after sending me the "valued shareholder letter"

 

[scsl]

Yeah it's fair enough to be upset with MFS. Though I'm probably not in a position to say because I have to admit, I'm still a newbie compared to everyone here...

The following are just some forecasted figures from HFA's summary income statement from their prospectus. ($ millions)

06 statutory 06 proforma 07
NPAT (10.5) 8.9 13.9
AUM 2,496 2,496 3,567

EPS (cents) (5.2) 4.4 6.9

I'm also looking forward to MFS/HFA's next announments... I'm guessing that people are anticipating some really good news!

 

[smoothsatin]

I also got into MFS via breakfree, i think i bought breakfree at 1.8 then MFS gave 3 of theirs for 1 of Breakfrees, so has gone well so far. Have traded it several times since and bought more at 3.7 a month or so ago. Difficult to see downside with it, although quality of its assets that it spins off are sometimes questionable....eg i am not happy with retirement village activity, but all that matters in the short and medium term is that they flog them off....will continue to run for a couple of years yet i suspect....all aboard!

 

[michael_selway]

I also got into MFS via breakfree, i think i bought breakfree at 1.8 then MFS gave 3 of theirs for 1 of Breakfrees, so has gone well so far. Have traded it several times since and bought more at 3.7 a month or so ago. Difficult to see downside with it, although quality of its assets that it spins off are sometimes questionable....eg i am not happy with retirement village activity, but all that matters in the short and medium term is that they flog them off....will continue to run for a couple of years yet i suspect....all aboard!

yeah if they flog it off when the price is high, thats ok then, no risk if the assets crash

MBL - Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 382.3 440.2 471.2 478.0
DPS 215.0 250.0 267.5 292.0

BNB - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 77.0 106.3 130.5 156.3
DPS 23.0 33.0 41.0 48.5

AFG - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 32.0 48.7 62.3 77.4
DPS 30.6 42.0 43.0 45.6

MFS - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008 2009
EPS -6.8 24.4 30.0 39.2 48.3
DPS -- 14.0 18.5 23.5 28.5

thx

MS

 

[smoothsatin]

Long run, they may get a bad rep and find it difficult to sell assets to investors, but this is only an if, i am certainlt not condeming any of their spin offs, i even had MFT for a bit, but sold when they sold the gold coast property last year. Those estimates are very conservative btw, eps for 06 was 43 and div 26, with management predicted year on year eps growth going forward. granted you can go broke believing mangement forecasts, but these guys have always been conservative with estimates in the past. One of the few sizable stocks you can realistically see gaining 40 or more % in the next 12 months. What else are you looking at at the moment?

 

[scsl]

Long run, they may get a bad rep and find it difficult to sell assets to investors, but this is only an if, i am certainlt not condeming any of their spin offs, i even had MFT for a bit, but sold when they sold the gold coast property last year. Those estimates are very conservative btw, eps for 06 was 43 and div 26, with management predicted year on year eps growth going forward. granted you can go broke believing mangement forecasts, but these guys have always been conservative with estimates in the past. One of the few sizable stocks you can realistically see gaining 40 or more % in the next 12 months. What else are you looking at at the moment?

I don't think it's because of a bad reputation. Although they have access to a large number of financial planners and retail investors, MFS still doesn't have the reach and reputation of say MacBank. MFS has spun off several listed companies already, and with each one, management has learned a great deal and will improvise in the future.

MFS closed at $4.39 today. At this level, I think MFS is definately undervalued. I am confident that it can gain at least the 40% smoothsatin mentioned and wouldn't be surprised if it is up 50-60% this time next year. The past year has seen a huge re-rating in the sp and I believe that more is on the way as the market realises and appreciates its potential.

Despite a strong run up from about $3.70 (which has turned out to be a great buy!), I think the sp can keep rising strongly and I expect this very soon. A close above $4.50 would be bullish.

 

[Prospector]

This is not directly share related in the short term, but I heard a dreadful tale of customer service about Breakfree yesterday. A client had booked and paid flights and accommodation (with Breakfree) from Adelaide to Cairns a few months earlier, but was contacted the DAY before departure by Breakfree that "sorry, we have overbooked and you cant stay with here!" WHAT!

The people said we have paid for flights and we are coming and will sleep in your foyer! And threatened legal action, obviously. Eventually they were accommodated elsewhere! They heard later that they were bumped by owners wanting to stay in their own units.

We owned an apartment in the French Quarter at Noosa until last year. When Breakfree bought the Management rights after a few years of ownership, the whole place went from being a boutique 'one off' kind of place to being a Breakfree branded place. Most owners were furious! We hated the new management and sold as soon as we could!

We bought shares in BRK at about the same time, so we could have a bigger voice. I agree that this has been a good move profit wise, but as an investment based on corporate values - well ?????

 

[scsl]

It is very hard to see MFS underperform in the next few years. MFS is now a billion dollar company and with strong growth potential, it is only a matter of time before it gains entry into the ASX 200. This will no doubt see industry heavyweights start to appear on MFS’s share register and at the same time, see the sp head north as they scramble to accumulate shares (institutions now hold 28% of shares).

I think that MFS continues to be undervalued by the market, relative to its competitors. (MFS plans to launch a $600 million tourism-focused investment trust. To be launched by the first quarter next year, this offloading of all of its property and tourism assets will see MFS become a pure financial services company. I believe this reiterates the fact that MFS should be valued according to the likes of MacBank, Babcock and Allco Finance Group) Looking at FY07 forecast earnings, MacBank is on a P/E ratio of 14.3, Babcock 18.0 and Allco 17.1. In comparison, MFS has a P/E of 13.7. Please note that this is based on earnings estimates. Having said that, MFS’s P/E of 13.7 is calculated from the median EPS estimate of 31.5 cents. However, MFS has had a history of underpromising and overdelivering** and so I believe that FY07 EPS will be at least 35-40 cents (FY08 forecast earnings is 39.2 cents). So say for example, MFS earns 35 cents per share. That would equate to a P/E of 12.3, which just represents great value.

**For example, where analysts estimated that FY06 NPAT would come in at about $50-55 million, MFS announced a figure of $97.4 million!

Also, MFS should command a higher P/E because it is estimated that it will have the highest growth rate. So at present, MFS’s valuation is very attractive.

In giving guidance for 2007, MFS talked about ‘future transactions and its deal pipeline’. Hence, MFS is still attracted to being involved in future acquisitions which are likely to be packaged with other assets into listed funds/companies. Domestically, MFS is looking in the sub $200 million space, thereby avoiding competition from the likes of MacBank and Babcock. This strategy has worked in the past and has produced healthier returns on investments than say, the multi-billion dollar deals that MacBank is regularly involved in.

To my surprise and delight, MFS is establishing an overseas funds management subsidiary. This displays that MFS has a lot of confidence in their expertise and experience.

Price targets, broker recommendations, great past performance aside, I genuinely believe that MFS will continue to be a fantastic short term and long term trade/investment. I am a strong believer of the MFS story and suggest that those looking for a great investment should do their research on this up-and-coming financial company.

Cheers,
scsl

 

[smoothsatin]

It is very hard to see MFS underperform in the next few years. MFS is now a billion dollar company and with strong growth potential, it is only a matter of time before it gains entry into the ASX 200. This will no doubt see industry heavyweights start to appear on MFS’s share register and at the same time, see the sp head north as they scramble to accumulate shares (institutions now hold 28% of shares).

I think that MFS continues to be undervalued by the market, relative to its competitors. (MFS plans to launch a $600 million tourism-focused investment trust. To be launched by the first quarter next year, this offloading of all of its property and tourism assets will see MFS become a pure financial services company. I believe this reiterates the fact that MFS should be valued according to the likes of MacBank, Babcock and Allco Finance Group) Looking at FY07 forecast earnings, MacBank is on a P/E ratio of 14.3, Babcock 18.0 and Allco 17.1. In comparison, MFS has a P/E of 13.7. Please note that this is based on earnings estimates. Having said that, MFS’s P/E of 13.7 is calculated from the median EPS estimate of 31.5 cents. However, MFS has had a history of underpromising and overdelivering** and so I believe that FY07 EPS will be at least 35-40 cents (FY08 forecast earnings is 39.2 cents). So say for example, MFS earns 35 cents per share. That would equate to a P/E of 12.3, which just represents great value.

**For example, where analysts estimated that FY06 NPAT would come in at about $50-55 million, MFS announced a figure of $97.4 million!

Also, MFS should command a higher P/E because it is estimated that it will have the highest growth rate. So at present, MFS’s valuation is very attractive.

In giving guidance for 2007, MFS talked about ‘future transactions and its deal pipeline’. Hence, MFS is still attracted to being involved in future acquisitions which are likely to be packaged with other assets into listed funds/companies. Domestically, MFS is looking in the sub $200 million space, thereby avoiding competition from the likes of MacBank and Babcock. This strategy has worked in the past and has produced healthier returns on investments than say, the multi-billion dollar deals that MacBank is regularly involved in.

To my surprise and delight, MFS is establishing an overseas funds management subsidiary. This displays that MFS has a lot of confidence in their expertise and experience.

Price targets, broker recommendations, great past performance aside, I genuinely believe that MFS will continue to be a fantastic short term and long term trade/investment. I am a strong believer of the MFS story and suggest that those looking for a great investment should do their research on this up-and-coming financial company.

Cheers,
scsl

Not to dull your enthusiam, but i should clear a few things up for people reading your post, eps for 06 was 0.43, almost exactly in line with broker forecasts, also what are you basing your eps future estimates on? You probably need to differentiate between recurring income and profit from transaction income. Frankly, broker estimates for a company like MFS in 08, whose profit is far more sensitive to individual deals than mbl, bnb etc, are stabs in the dark at best.

Otherwise your diagnosis looks pretty good

 

[michael_selway]

**For example, where analysts estimated that FY06 NPAT would come in at about $50-55 million, MFS announced a figure of $97.4 million!
Cheers,
scsl

Hi

did that include any one off sales?

thx

MS