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PTB - PTB Group

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PTB Group Limited (PTB) is a specialised aviation business, with operations in turbine engine repair, trading, financing and rental of aircrafts and turbines. The group has three business groupings under its aviation asset management: Pacific Turbine Brisbane (PTB); IAP Group; and Financing and Rentals. PTB operates from Brisbane, Sydney, and Bankstown Airport in Australia, and Blackpool Airport in the UK.

http://www.pacificturbine.com.au/investors.html
 

galumay

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I recently took a small position in this company, I have looked at it in the past a couple of times, but never quite developed the conviction to buy. The debt was one of the main things that put me off.

I was tipped off about the details of the recently announced acquisition and also learnt about the company's plans to sell off some of its property and pay off the debt.

I think the business is trading at a discount to value under $1 and could see a meaningful rerate in the next couple of years if it can execute the acquisition well and it provides the increased EPS after dilution that is predicted. It will probably also attract some more attention now its market cap has increased significantly and there is more free float.
 
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Good little company! I bought a small parcel in early 2018 but sold last year to help finance a property purchase. I regret selling :)
 
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Still staying out of it as operating cash-flows are very poor and debt is being used to pay dividend. It's certainly not cheap either and has a history of not growing the share price. The acquisition of a US business is concerning as well - Australian acquisitions in the US never - ever - ever work out. The question you have to ask is 'why didn't one of the 320 million Americans buy it first?' It's very hard to sustainably grow and pay a high yield dividend. Something has to give.

Still it looks to be a good niche business which should remain solid though downturn considering its turbo prop work they do - not commercial jets. If the 1/2 yearly shows a positive trend to reducing debt levels and better cash conversion (or they do another capital raising) I'll be interested.
 

galumay

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Its not strictly true to say dividend was paid out of debt, you could equally say it was paid out of retained earnings, or capital raised. I think the current price is a reasonable discount to my range of valuation, but yours may well be different of course. I would tend to agree with you about US acquisitions, but "never ever ever" is an exaggeration, and this is quite likely an exception based on the results already.

I dont think its a stonk and I am not holding it in expectation of a multi bagger, but I think it will still be round for many years, and the returns on incrementally invested capital meet my hurdle rate so I am happy to hold for what I believe will be superior absolute returns over time.
 
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Its not strictly true to say dividend was paid out of debt, you could equally say it was paid out of retained earnings, or capital raised. I think the current price is a reasonable discount to my range of valuation, but yours may well be different of course. I would tend to agree with you about US acquisitions, but "never ever ever" is an exaggeration, and this is quite likely an exception based on the results already.

I dont think its a stonk and I am not holding it in expectation of a multi bagger, but I think it will still be round for many years, and the returns on incrementally invested capital meet my hurdle rate so I am happy to hold for what I believe will be superior absolute returns over time.
Back in Feb 12th, you say you acted on a tipoff and took a small position. Subsequent to that the price then nosedived from 80 cents to less than 30 cents???? That's not much of a tipoff....Lol.

Now you suggest the current price is a reasonable discount to your valuation?.... Lol. Objectivity and credibility appear to be once again issues here.
 

galumay

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PTB down 10% on news out of today's AGM, SH's not happy with the cut in dividend, change to once per year, ending DRP and loss of franking. Probably shook out those just holding for the yield as it was substantial previously.
 
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Not all that surprising! I think its fair to say a number of people were blindly buying shares without understanding how the dividend was being funded. This is a step in the right direction. exchnage rates won't be helping but they could look to complete another raising and more acquistions in the US

"Based on the financial instruments held at 30 June 2020, had the Australian dollar weakened/strengthened by 10% against the USD dollar, with all other variables held constant, the Group’s post tax position for the year would have been $2,380,000 higher/$1,947,000 lower"

"It is worth noting that the company undertakes the majority of its sales and purchases in US dollars. Therefore, the majority of profit is generated in US dollars, with the reported AUD profit positively impacted by any weakening of the Australian dollar."


Exchange rate was about 1.44 EOFY, its 1.36 today.
 

galumay

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Agree @The Triangle, it seems when yields are high in the current market, there is a subset of investors who dont look any deeper than that. Its probably reflective of the general move into equities from other asset classes where there was less risk but returns were converging on zero.
 
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