Loved this article. On the acquisition multiples, it's worth noting the Swick, DDH and Perenti multiples were all script (Perenti had a minor cash proportion with script the majority), which meant the multiples were lower. It is hard to see the Mitchell family giving up control (though I guess same could have been said for Kent Swick) so I think a premium is warranted for valuation purposes. For me a rough rule of thumb for ASX listed drillers is to buy when div yield is around 10% (worked really well in the past for me), which is the case for MSV now. Ultimately Australian investors have a strong bias for dividends and at some stage if/when MSV start paying franked dividends, then expect share price could react well.
Loved this article. On the acquisition multiples, it's worth noting the Swick, DDH and Perenti multiples were all script (Perenti had a minor cash proportion with script the majority), which meant the multiples were lower. It is hard to see the Mitchell family giving up control (though I guess same could have been said for Kent Swick) so I think a premium is warranted for valuation purposes. For me a rough rule of thumb for ASX listed drillers is to buy when div yield is around 10% (worked really well in the past for me), which is the case for MSV now. Ultimately Australian investors have a strong bias for dividends and at some stage if/when MSV start paying franked dividends, then expect share price could react well.
Thank you Nick. All good points!
Unfortunately, due to the 90%+ payout ratio, last year's dividend was above normal so I wouldn't expect this 10% yield to be sustainable.
Why only 3% then?
My concerns are outlined in the previoust post
Great article - did you discuss falling oil prices and the impact on the business?
Thank you!
We did. I won't impact much. Fuel is not a relevant cost for them since it gets provided at the mine sites
Gotcha that makes sense and did they mention if it will impact the customers themselves?
I didn't ask them about it. It should