The pre-tax return on unlevered net tangible assets is below 10%. Do you think the return on incremental capital is better than this? If not, I'd struggle to see this as anything other than a multiple re-rating play with relatively mediocre upside.
Also, just looking at Yahoo finance, it looks like the share count more than quadrupled in FY22 - is this an error? Or if not why was this?
The ROI numbers in these kinds of industries are unfortunately not linear so it's tough to come to a conclusion only by looking at a period of couple of years. But, yes - I think so.
In that case, what do you think the ROIIC is, on a normalised basis? For me that's the most important number here, because if a company wants to grow 20% PA but ROIIC is only 10%, they're gonna have to raise capital.
Thanks for the write-up. I might spend some time following and doing periodic DD.
The EBITDA margin looks slightly lower than some North American transportation companies. I assume that it would have to do with the chemical aspect compared to normal road freight.
Do you have any idea what their insurance claims look like in the event of any accidents? It seems like damage to reputation or accident claims could be a potential risk.
Thank you. They break down EBITDA margin by segment in the reports if you want to gain a deeper understanding.
This is what Simon had to say on insurance question on the recent AGM call:
"I'll answer that, if you like, Tim. Yes, it's a significant challenge. It's a challenge for any company involved with chemicals. DGL now has substantial scale. So we're able to negotiate favorable insurance rates across our network. I think if you're running a small single site operation, you'd have a significant or a serious headache trying to get insurance. I believe we have the scale and the sophistication in the market and the disciplines in place to keep our assets safe whereby we'll be able to arrange competitive insurance."
The pre-tax return on unlevered net tangible assets is below 10%. Do you think the return on incremental capital is better than this? If not, I'd struggle to see this as anything other than a multiple re-rating play with relatively mediocre upside.
Also, just looking at Yahoo finance, it looks like the share count more than quadrupled in FY22 - is this an error? Or if not why was this?
The ROI numbers in these kinds of industries are unfortunately not linear so it's tough to come to a conclusion only by looking at a period of couple of years. But, yes - I think so.
That increase in sharecount is due to IPO
In that case, what do you think the ROIIC is, on a normalised basis? For me that's the most important number here, because if a company wants to grow 20% PA but ROIIC is only 10%, they're gonna have to raise capital.
Thanks for the write-up. I might spend some time following and doing periodic DD.
The EBITDA margin looks slightly lower than some North American transportation companies. I assume that it would have to do with the chemical aspect compared to normal road freight.
Do you have any idea what their insurance claims look like in the event of any accidents? It seems like damage to reputation or accident claims could be a potential risk.
Thank you. They break down EBITDA margin by segment in the reports if you want to gain a deeper understanding.
This is what Simon had to say on insurance question on the recent AGM call:
"I'll answer that, if you like, Tim. Yes, it's a significant challenge. It's a challenge for any company involved with chemicals. DGL now has substantial scale. So we're able to negotiate favorable insurance rates across our network. I think if you're running a small single site operation, you'd have a significant or a serious headache trying to get insurance. I believe we have the scale and the sophistication in the market and the disciplines in place to keep our assets safe whereby we'll be able to arrange competitive insurance."
There's no specifics to be found unfortunately.
The ceo did speak about this. They have one of the highest premiums for insurance.