Count Financial ticks all of the boxes in our absolute quality criteria, with high-unleveraged underlying returns.
From an absolute risk perspective we are very confident that permanent loss to investment capital is extremely low.
With a current estimated free cash flow yield of 9.34% vs. 10yr Govt bond yield of 5.35% it represents a significant opportunity.
Being mindful that the payout ratio is very high and therefore the bulk of the investment returns will result from the payment of earnings to owners via dividends versus significant share price appreciation.
The cash flow history depicts one of stability and certainty.
As Australia's largest independent financial planning group, the main risk to revenues & earnings lies with the movements of the equities markets. An aside that somewhat offsets this risk is the compulsory superannuation regime, which provides a constant source of new Funds Under Advice.
The consolidated net profit after tax for the half year to 31 December 2010 attributable to the owners of the parent was $42.88m, up 212% on previous corresponding period.
The normalised Net Profit After Tax (NPAT) for the period was $16.9m, up 23% over the pcp. The CountPlus IPO was very successful in December 2010 and resulted in a gain of $34.1m recorded for Count.
This is an income play with long-term growth in line with the business growth; COU is currently paying a Gross 10.8% yield that warrants it a place in my portfolio.
For more information on COU please contact us on 07 4771 4577.