StockTalk

Good news signalled for holders yesterday..... increased divvy a possibility.

https://www.nzx.com/announcements/395197

Spark announces sale of 70% of TowerCo business for $900 million

Spark New Zealand today announced the Ontario Teachers' Pension Plan Board ("Ontario Teachers'") will acquire a 70% interest in its TowerCo business.

Spark's TowerCo business ("TowerCo") is a leading New Zealand towers business with approximately 1,263 sites. The transaction values the business at $1.175 billion, representing a FY23 pro-forma EBITDA multiple of 33.8x(1).

Spark expects net cash proceeds(2) of $900 million at completion, which is subject to Overseas Investment Office approval, and is anticipated to occur in the first half of FY23.

They got a pretty impressive price for it. Where do you think they will reinvest the proceeds to increase earnings to allow increasing the dividend? Maybe a larger foray into the data centre industry?

Quote from: Plata on Jul 13, 2022, 03:45 PMThey got a pretty impressive price for it. Where do you think they will reinvest the proceeds to increase earnings to allow increasing the dividend? Maybe a larger foray into the data centre industry?

Crikey, they could buy SKT!  ;)

Seriously the logical thing would be to use the funds for a multiple of initiatives eg reduce debt, strengthen their Balance Sheet, pay a few more cents in divies, and yes invest in new revenue growth opportunities such as data centres etc.

Interesting times ahead for holders.

Seems to be lots of interest before Wednesday's results. Not been this high for 22 years I think?

Fully valued @ 5.33?

Results out...... I reckon holders will be happy.... nice path to future Divvy growth. Safe and sound. Share buy back a good sign.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SPK/397478/377291.pdf

"Spark's transition from its traditional telecommunications heritage to a more diversified and higher growth digital services provider continues at pace. As we look to FY23 we have confidence in Spark's ability to grow free cash flow to ~$460-$500 million to fund our ordinary dividend. As a result, we are guiding to a total FY23 dividend of 27 cents, 100% imputed, funded through earnings and free cash flow growth. This is the first time the total dividend has increased since 2016 and reflects the confidence we have in Spark's strategy and future growth potential."

As announced in July, Spark has reached agreement to sell a 70% stake in its TowerCo business to the Ontario Teachers' Pension Plan (OTPP). Spark expects net cash proceeds4 of ~$900 million at completion, which is conditional on Overseas Investment Office approval and anticipated to occur in the first half of FY23.

Justine continued, "Following completion of the TowerCo transaction up to $350 million will be returned to shareholders, which we intend to deliver through an on-market share buy-back. This will be subject to market conditions at the time, and we may investigate alternative return options.

"A further $350 million will be invested in future growth opportunities, such as digital infrastructure, scaling Spark Health and Spark IoT, and accelerating the commercialisation of emerging technology, such as digital identity and verifiable data through our subsidiary MATTR.

One advantage of dealing thro' ASB is access to MorningStar (though some would argue it's more of a disadvantage ;o) .

Mobile Provides the Spark While Tower Provides the Capital

We lift our fair value estimate for narrow-moat Spark New Zealand by 4% to NZD 4.70 per share (AUD 4.20 at current exchange rates), reflecting the mobile-driven upgrades to our earnings expectations.

While the 3% rise in fiscal 2022 EBITDAI to NZD 1,150 million was in line with our expectations, the mobile result was stellar. Not only was service revenue up a market-topping 5% to NZD 886 million, but overall mobile gross margin surged to 66.9% (from 63.8% a year ago) as better data analytics reduced product costs. Underlying mobile EBITDAI margin is likely to have enjoyed similar expansion, driven by perennial efficiency improvements.

Mobile drives the circa 3% upgrade to our forward EBITDAI forecasts, with our fiscal 2023 expectation of NZD 1,212 million within management guidance. The robust 5% growth forecast is underpinned by our forecast 6% increase in mobile service revenue, partly aided by the return of around NZD 30 million in high-margin roaming revenue (60% of pre-COVID-19 levels).

We also lift our DPS forecasts to NZD 0.27 in future years. The group detailed its new 60% to 80% payout policy from free cash flow, sanitised of working capital movements—a novel concept in free cash flow definition. However, in practice, we believe Spark has set the DPS base at NZD 0.27 (the first increase since fiscal 2016). The goal is to at least maintain this to appease the group's largely dividend-focused shareholders.

The circa NZD 500 million a year required to pay the NZD 0.27 dividend, up from circa NZD 460 million previously for the NZD 0.25 dividend, can be funded largely from operations. Periodic shortfalls (due to growth capital expenditure and working capital volatility) can be covered by balance sheet. Net debt/EBITDA is 1.3, and the new capital management framework indicates Spark is willing to lift its comfort threshold above the present 1.4 target, if need be. That is before we factor in the capital flexibility to be provided by the TowerCo sales proceeds.

REDUCE $4.70

Ladies and Gentlemen.Take your SPK target price pick.
Morning star $4.70.
Craigs ......$5.18
Market Screener high.$5.90
Market Screener low .$4.60
Share price at close today $5.38
Lorraina......Happy with any of the above..,,.lol.
Only thing every one can agree on is SPK are going to increase their divie.

Latest update

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SPF/416561/400646.pdf

Forecast EBITAI for FY24 lower than FY23..... but FY 23 boosted by the Tower Co sale.

Percy / Lorraina will be happy......FY23 dividend of 27cps,100% imputed – an increase of 2cps vs. FY22

Hardly ever talked about this stock because its so boring but one of the safest stocks on the NZX IMO, current prices looking very attractive and a great yield to boot. Weakness of late appears to be end of year tax loss selling to me. Disc-Hold quite a few.

Quote from: Breezy on Mar 27, 2024, 05:10 PMHardly ever talked about this stock because its so boring but one of the safest stocks on the NZX IMO, current prices looking very attractive and a great yield to boot. Weakness of late appears to be end of year tax loss selling to me. Disc-Hold quite a few.

Hi Breezy, am thinking the same and have started stocking up SPKs in last few weeks. What a dream to trade compared to HLG. The NZX opens at 3pm here in California and closes at 10pm the previous day. It is now over here 4.10pm Monday 15/4/24.   

Quote from: seaweed on Apr 16, 2024, 11:10 AMHi Breezy, am thinking the same and have started stocking up SPKs in last few weeks. What a dream to trade compared to HLG. The NZX opens at 3pm here in California and closes at 10pm the previous day. It is now over here 4.10pm Monday 15/4/24.   

User friendly trading hours for you compared to trying to trade the US from NZ. Yep big liquidity with reasonable volatility make it a great stock to trade, its a well used money parking spot for overseas punters as a currency hedge.

https://www.tradingview.com/news/marketindex:58b311251094b:0-the-10-most-overbought-and-oversold-asx-200-stocks-week-16/

The oversold list continues to feature a number of recurring names such as Spark New Zealand, IDP Education, and Aristocrat Leisure. The stocks have all sold off for various reasons ... but serve as a reminder that once a stock ends up in deep oversold territory – it often lingers there for a while.

Quote from: kiwi2007 on Apr 19, 2024, 11:11 AMhttps://www.tradingview.com/news/marketindex:58b311251094b:0-the-10-most-overbought-and-oversold-asx-200-stocks-week-16/

The oversold list continues to feature a number of recurring names such as Spark New Zealand, IDP Education, and Aristocrat Leisure. The stocks have all sold off for various reasons ... but serve as a reminder that once a stock ends up in deep oversold territory – it often lingers there for a while.

Doesnt matter with SPK how long it stays oversold for as its keeps spitting out consistent dividends. Also great buying opportunity.

Spark, according to Solly of Upper Harbour Management, is susceptible to the half-yearly review of the MSCI Large Cap Index.
Explains a bit of the weakness.

Spoiler alert..... I don't hold SPK, ( but own Vodafone via IFT)

That said, I've enjoyed reading Snoopy's recent SPK posts on the other chanel.  Check them out. He rates SPK as a possible buy or top-up at current low SP levels.

SPK has been a good Div/yield stock to-date for holders, however these dividends have arguably been supported by SPK's history of asset sales. IMO the question that needs to be asked is how sustainable are SPK's divvies going forward?  This Q also possibly explains a little of SPK's recent SP weakness.

I don't see the appeal, the dividend yield is alright but they are paying out much higher DPS than EPS. Surely something has got to give eventually? Why own SPK over a gentailer?

Quote from: Plata on Apr 27, 2024, 03:11 PMI don't see the appeal, the dividend yield is alright but they are paying out much higher DPS than EPS. Surely something has got to give eventually? Why own SPK over a gentailer?

Theenk 'battle ztrategy'.  Best to have deefferent squadrons at deefferent locations.    Put all your planes in one place and a raid on your airfield could cripple your air vorce completely.  Zo zpread ze risk!   Ze question eez not to judge which eez best: Zpark or Gentailer.  You have BOTH as your insurance policy.

RB

Quote from: Plata on Apr 27, 2024, 03:11 PMI don't see the appeal, the dividend yield is alright but they are paying out much higher DPS than EPS. Surely something has got to give eventually? Why own SPK over a gentailer?

Because if anything happened to either the country would be stuffed and you would have far bigger things to worry about.

Downgrade and pressure on the dividend levels? You judge.

https://www.nzx.com/announcements/430555

Quote from: Left Field on May 06, 2024, 08:33 AMDowngrade and pressure on the dividend levels? You judge.

https://www.nzx.com/announcements/430555

Not really much of a downgrade looking at those figure ranges, dividend staying the same. Great buying today so that's what I'm doing.

Quote from: Breezy on May 06, 2024, 04:25 PMNot really much of a downgrade looking at those figure ranges, dividend staying the same. Great buying today so that's what I'm doing.

Maybe a good move for dividend yield....however TA is still heading south

I wish you well.

Quote from: Breezy on May 06, 2024, 04:25 PMNot really much of a downgrade looking at those figure ranges, dividend staying the same. Great buying today so that's what I'm doing.

Maybe caution on averaging in, the clear and present warning was slow down and stopped digital contracts. It's just beginning, government especially are cancelling inflight projects and forward planned projects. This will take a while to play out, no need to rush into SPK, the buying is likely to get better, imo.

Quote from: Buzz on May 06, 2024, 07:23 PMMaybe caution on averaging in, the clear and present warning was slow down and stopped digital contracts. It's just beginning, government especially are cancelling inflight projects and forward planned projects. This will take a while to play out, no need to rush into SPK, the buying is likely to get better, imo.

Yes could go lower but I guess thats always the case, the Govt can't afford to go backwards much in this space if they want to stay relevant on the world stage, its innovate or become a dinosaur in the world we live in. SPK themselves have proven to be quite apt at trimming costs and chopping off excessive fat so that should help.

Quote from: Breezy on May 06, 2024, 07:48 PMYes could go lower but I guess thats always the case, the Govt can't afford to go backwards much in this space if they want to stay relevant on the world stage, its innovate or become a dinosaur in the world we live in. SPK themselves have proven to be quite apt at trimming costs and chopping off excessive fat so that should help.

Honestly, I recommend (not advice, just suggest) that you recalibrate your confidence in the highlighted bit above. Government have no concern at all in that, at the moment and for some time to come, in anything other than slashing costs and digital projects are being canned, stopped, blocked, left right and centre. Spark is a massive to supplier government and they told us today in no uncertain terms, things have changed and it will have material impact on the current business and pipeline. That's all I have to say on this, except that rose coloured spectacles could get investors into serious trouble for the foreseeable future. Imo as always.

Quote from: Buzz on May 06, 2024, 08:12 PMHonestly, I recommend (not advice, just suggest) that you recalibrate your confidence in the highlighted bit above. Government have no concern at all in that, at the moment and for some time to come, in anything other than slashing costs and digital projects are being canned, stopped, blocked, left right and centre. Spark is a massive to supplier government and they told us today in no uncertain terms, things have changed and it will have material impact on the current business and pipeline. That's all I have to say on this, except that rose coloured spectacles could get investors into serious trouble for the foreseeable future. Imo as always.

Yes a true reflection of where NZ is at in this moment, not in a good space on basically all fronts. Having said that there are some stocks im more than happy to hold for 10 yrs and this is one of them.

Price stabilizing around current levels and looks oversold on just about any chart. Happy to keep adding at these bargin prices and I even agree with the Snoop dog on the other channel which is rare.

Quote from: seaweed on Apr 16, 2024, 11:10 AMHi Breezy, am thinking the same and have started stocking up SPKs in last few weeks. What a dream to trade compared to HLG. The NZX opens at 3pm here in California and closes at 10pm the previous day. It is now over here 4.10pm Monday 15/4/24.   

Hi Mr Seaweed, saw your post on the other channel, yes its closing lower on volume cause the bigger holders are selling to bigger buyers on close, im still buying but soon to run out of dosh. Once I've run out ill start shorting my own shares by selling parcels for a loss and buying back more shares leading up to the next divvy, good luck.

Quote from: Breezy on May 08, 2024, 05:54 PMHi Mr Seaweed, saw your post on the other channel, yes its closing lower on volume cause the bigger holders are selling to bigger buyers on close, im still buying but soon to run out of dosh. Once I've run out ill start shorting my own shares by selling parcels for a loss and buying back more shares leading up to the next divvy, good luck.

Like you, Breezy, Spark is one of my core stocks that I look to add to when the price is right - as it is now.
I'm not concerned about the recent downgrade, to which there has been a bit of an over-reaction. Like you, I don't see how NZ can afford not to keep investing in telecommunications and digital services. The current Governments scorched earth approach to the public sector isn't sustainable so that wheel will turn in due course.
Shorting your own stocks? Never done that and wonder how that would work a highly traded stock like Spark.

Quote from: LoungeLizard on May 08, 2024, 06:46 PMLike you, Breezy, Spark is one of my core stocks that I look to add to when the price is right - as it is now.
I'm not concerned about the recent downgrade, to which there has been a bit of an over-reaction. Like you, I don't see how NZ can afford not to keep investing in telecommunications and digital services. The current Governments scorched earth approach to the public sector isn't sustainable so that wheel will turn in due course.
Shorting your own stocks? Never done that and wonder how that would work a highly traded stock like Spark.

Its just my term for selling a parcel of my shares for a loss and buying the parcel back slightly cheaper and with more in the parcel, as I have no intention of selling my holding below my original avg buy price it just means I end up with more shares and fights boredom at the same time. PS-I don't recommend this strategy for the faint-hearted as it can backfire if you get too enthusiastic.

Quote from: Breezy on May 08, 2024, 05:54 PMHi Mr Seaweed, saw your post on the other channel, yes its closing lower on volume cause the bigger holders are selling to bigger buyers on close, im still buying but soon to run out of dosh. Once I've run out ill start shorting my own shares by selling parcels for a loss and buying back more shares leading up to the next divvy, good luck.

Dito here to. Sold some at 4.39 and bought them back on close at 4.31. No need to touch term deposits :) also drops my average price, my problem had bought too many before downgrade but am not too worried, it will go up leading into next div.

Quote from: seaweed on May 09, 2024, 09:51 AMDito here to. Sold some at 4.39 and bought them back on close at 4.31. No need to touch term deposits :) also drops my average price, my problem had bought too many before downgrade but am not too worried, it will go up leading into next div.

Yeah my avg price is currently $4.60 but like yourself not worried.

Quote from: Breezy on May 09, 2024, 09:56 AMYeah my avg price is currently $4.60 but like yourself not worried.

Hey Breeze, not so many sellers tonight. Bought 2 lots today some for 4.33 and the same amount on close of 4.33. Is this the bottom? time will tell but still need to buy another 5,000 to get back to my allocation.

Quote from: seaweed on May 09, 2024, 05:10 PMHey Breeze, not so many sellers tonight. Bought 2 lots today some for 4.33 and the same amount on close of 4.33. Is this the bottom? time will tell but still need to buy another 5,000 to get back to my allocation.

Yeah tested $4.30 then quickly bounced back up so looks near or at the bottom, way oversold anyway. I've got as many as I can buy so time to start selling for a loss and buying back.

Bought a shit ton this afternoon at $4.31

Quote from: entrep on May 09, 2024, 05:53 PMBought a shit ton this afternoon at $4.31

Good on you. Up nearly 10c since you bought in. If you would like to sell some back to me, I am buying in the 4.36 to 4.39 bracket :D 

Quote from: seaweed on May 13, 2024, 12:21 PMGood on you. Up nearly 10c since you bought in. If you would like to sell some back to me, I am buying in the 4.36 to 4.39 bracket :D 

You can buy under my price now  ;D

Quote from: entrep on May 15, 2024, 10:46 AMYou can buy under my price now  ;D

Index rebalancing blip. PS-Hasnt been this oversold in the last 10 yrs.

Overseas punters voting with their feet here, no confidence in the current NZ economy, the current Govt's scorched earth policies not helping after the last lot stripped the cupboards bare.

It's starting to look really compelling but it's always difficult to judge entry at such moments.

Quote from: Glenorchy on May 15, 2024, 05:07 PMIt's starting to look really compelling but it's always difficult to judge entry at such moments.

Take a look at the technicals on a 10 yr chart, its never been more compelling.

Classic dividend trap time for lots of NZ companies at the moment...... the market is asking, "are current dividend levels sustainable in a depressed economy?"

Quote from: Left Field on May 15, 2024, 05:51 PMClassic dividend trap time for lots of NZ companies at the moment...... the market is asking, "are current dividend levels sustainable in a depressed economy?"

The overseas punters selling here aren't asking that question, the dividend is of secondary importance unlike to the retail punters, SPK is a currency hedge and money parking spot for them and our current economic situation has too much risk so its vacate the parking lot time. Gosh that OCA troll SailorRob on the other channel has started rambling on the SPK thread over there I see.

Quote from: Breezy on May 15, 2024, 06:43 PMThe overseas punters selling here aren't asking that question, the dividend is of secondary importance unlike to the retail punters, SPK is a currency hedge and money parking spot for them and our current economic situation has too much risk so its vacate the parking lot time. Gosh that OCA troll SailorRob on the other channel has started rambling on the SPK thread over there I see.

SPK worthn2 bucks that Rob reckons

Quote from: winner (n) on May 15, 2024, 06:55 PMSPK worthn2 bucks that Rob reckons

The other channel is more than welcome to him and that other troll bull, such miserable individuals, both would drive a teatotaler to drink.

It can be hard to understand some of the movements in bluechip stocks at the moment but I reckon Breezy is onto it - half of NZX shares are foreign owned and at the moment NZ looks like a depressed, no growth country in the grip of Government austerity with a weakening currency. Not exactly a safe haven, hence the volume of funds (and people) exiting our shores.

Quote from: LoungeLizard on May 15, 2024, 07:37 PMIt can be hard to understand some of the movements in bluechip stocks at the moment but I reckon Breezy is onto it - half of NZX shares are foreign owned and at the moment NZ looks like a depressed, no growth country in the grip of Government austerity with a weakening currency. Not exactly a safe haven, hence the volume of funds (and people) exiting our shores.

Which by definition means that SP's are depressed and fabulous buying or accumulation is amongst us. If you look back at the times when the NZX on paper was completely stuffed, the companies that were sustainable and profitable were excellent buying. Just because some conglomerate international hedge funds yada yada decides to sell, is exactly the reason why some of us decide to buy!

Quote from: Buzz on May 15, 2024, 08:50 PMWhich by definition means that SP's are depressed and fabulous buying or accumulation is amongst us. If you look back at the times when the NZX on paper was completely stuffed, the companies that were sustainable and profitable were excellent buying. Just because some conglomerate international hedge funds yada yada decides to sell, is exactly the reason why some of us decide to buy!

That's sort of what I'm saying - the quite extraordinary dip in the SP of infrastructure stock has very little to do with company performance or prospects, mostly to do with foreign investment sentiment. So yes, I'd agree  - this is great buying opportunity for companies like Spark. I've been topping up  and my average price is now $4.50, which is an absolute steal in my opinion.

Quote from: LoungeLizard on May 15, 2024, 09:00 PMThat's sort of what I'm saying - the quite extraordinary dip in the SP of infrastructure stock has very little to do with company performance or prospects, mostly to do with foreign investment sentiment. So yes, I'd agree  - this is great buying opportunity for companies like Spark. I've been topping up  and my average price is now $4.50, which is an absolute steal in my opinion.

I'll be getting some SPK, but not until the severe SP down trend reverses. No point in buying a falling knife imo, when a reversal, albeit leaves a few $ on the table, says it's a compelling buy.

Quote from: Buzz on May 15, 2024, 09:08 PMI'll be getting some SPK, but not until the severe SP down trend reverses. No point in buying a falling knife imo, when a reversal, albeit leaves a few $ on the table, says it's a compelling buy.

I don't think it really matters, cheap is cheap even if it gets cheaper. Just as an aside the avg tp from 9 analysts after the wee downgrade is $5 with a low of $4.65. SPK makes up around 45% of my portfolio total so a pretty confident long term hold.

Quote from: Buzz on May 15, 2024, 09:08 PMI'll be getting some SPK, but not until the severe SP down trend reverses. No point in buying a falling knife imo, when a reversal, albeit leaves a few $ on the table, says it's a compelling buy.

Both SPK and IFT are interesting Teleco  infrastructure plays. IFT has One NZ (Vodafone) and interests in Cloud storage etc.

From a TA point of view their 5yr  charts are quite different..... question is.... which offers the best prospects for an investor at the moment?

Quote from: Left Field on May 16, 2024, 08:33 AMBoth SPK and IFT are interesting Teleco  infrastructure plays. IFT has One NZ (Vodafone) and interests in Cloud storage etc.

From a TA point of view their 5yr  charts are quite different..... question is.... which offers the best prospects for an investor at the moment?

Well IFT is a more diversified company and would have been an excellent buy quite a few years ago but not sure about now, One NZ aka Vodafone was the worst company i have ever dealt with so its a big no from me on the Telco side of things.

In terms of activity, we continued to sell the positions in
the telecommunications sector on the basis that
dividends have not been growing and the operating
environment lacks meaningful potential in our view. Here,
we sold Spark New Zealand and Telkom Indonesia. We
feel there are better opportunities in sectors such as
technology and utilities, which have similar levels of
dividend yield - March 24

That's Henderson Far East Income who had 2,500,00 + shares on their book in Jan. Probably all gone now.

Quote from: Breezy on May 16, 2024, 09:23 AMWell IFT is a more diversified company and would have been an excellent buy quite a few years ago but not sure about now, One NZ aka Vodafone was the worst company i have ever dealt with so its a big no from me on the Telco side of things.

Your past experience with Vodafone is no indication of its future...... IFT/One NZ has useful links to data storage, undersea cable infrastructure and even the electricity generation to power all of this as we head into tomorrow's world of data intensive AI.

SPK has been static for some time and is not as well placed for this future IMO.

Quote from: Left Field on May 16, 2024, 10:27 AMYour past experience with Vodafone is no indication of its future...... IFT/One NZ has useful links to data storage, undersea cable infrastructure and even the electricity generation to power all of this as we head into tomorrow's world of data intensive AI.

SPK has been static for some time and is not as well placed for this future IMO.

Whatever floats your boat, I used to own IFT when it was $3 odd and did a bit of divvy stripping but not interested at the current price, SPK on the other hand is a definite yes from me at anything under $4.80.

Quote from: Breezy on May 16, 2024, 10:55 AMWhatever floats your boat, I used to own IFT when it was $3 odd and did a bit of divvy stripping but not interested at the current price, SPK on the other hand is a definite yes from me at anything under $4.80.

I see a green shoots coming through at 4.19 or is the weed killer person going to kill it on close again. Either way we are all winners buying in under 4.30. Have been buying on close the last few days and near open today and more if need be on any more lower closers or prices. Have lost a few fingers in last month but have still got my nose ;D 

Quote from: Left Field on May 16, 2024, 10:27 AMYour past experience with Vodafone is no indication of its future...... IFT/One NZ has useful links to data storage, undersea cable infrastructure and even the electricity generation to power all of this as we head into tomorrow's world of data intensive AI.

SPK has been static for some time and is not as well placed for this future IMO.

Did you know that Spark has a number undersea cables as well with it's ownership interest in 'Southern Cross Cables', and they have 16 data centres in NZ including ownership of CCL the largest digital service provider in NZ. They're also very active with their electricity generation partner, particularly shifting to renewal generation.

Hard to tell, but it may be that the floor was the $4.17 mark, and is starting to tick back up.  :-\
Solid demand at these prices too.

SailorRob going hard against SPK and the Snoop dog on the other channel, I back the Snoop dog 100% over the drunken Sailor when it comes to this stock, that guy seriously needs to find another bridge to park himself under (But not this one)

Jeez SPK share price down 20% from recent highs

Suppose the faithful can't believe this and probably buying heaps more to average down and hoping like hell that things get better

Amazing how quickly a stock can become a dog of a stock ......and become one of those 'deep value' plays

Talking of deep value I'd say that HGH isca better bet than SPK at the moment.

Quote from: winner (n) on May 20, 2024, 08:18 AMJeez SPK share price down 20% from recent highs

Suppose the faithful can't believe this and probably buying heaps more to average down and hoping like hell that things get better

Amazing how quickly a stock can become a dog of a stock ......and become one of those 'deep value' plays

Talking of deep value I'd say that HGH isca better bet than SPK at the moment.

I'll stick to SPK thanks, far more defensive.

Quote from: winner (n) on May 20, 2024, 08:18 AMAmazing how quickly a stock can become a dog of a stock ......and become one of those 'deep value' plays

No way SPK qualifies as deep value.  Average of all analysts has them on a forward FY25 PE of 17.4 and that's after the fall.  https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/

Deep value is single digit PE's and extreme value is single digit PE's with the genuine prospect of good earnings growth in the years ahead.  HGH and TRA are classic examples of deep value plays. I don't think deep value / GARP buying strategies is something that's well understood on here at all.  It's all TA this and TA that.  Very few have the gonads to buy without TA support and some others who follow TA seem happy to hold stocks in a well-entrenched downtrend, go figure?

Quote from: Basil on May 20, 2024, 10:49 AMNo way SPK qualifies as deep value.  Average of all analysts has them on a forward FY25 PE of 17.4 and that's after the fall.  https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/

Deep value is single digit PE's and extreme value is single digit PE's with the genuine prospect of good earnings growth in the years ahead.  HGH and TRA are classic examples of deep value plays. I don't think deep value / GARP buying strategies is something that's well understood on here at all.  It's all TA this and TA that.  Very few have the gonads to buy without TA support and some others who follow TA seem happy to hold stocks in a well-entrenched downtrend, go figure?

SPK is more defensive than both those stocks and thats what a lot of people want, a boring infrastructure stock that is critical for the NZ economy and keeps spitting out consistent dividends year after year. I remember when you thought that TRA and HGH were both the biggest flea infested mutts ever to draw breathe, basically absolute basket cases especially TRA.

Quote from: Breezy on May 20, 2024, 11:00 AMSPK is more defensive than both those stocks and thats what a lot of people want, a boring infrastructure stock that is critical for the NZ economy and keeps spitting out consistent dividends year after year. I remember when you thought that TRA and HGH were both the biggest flea infested mutts ever to draw breathe, basically absolute basket cases especially TRA.

Companies change and evolve over time mate and the key is to change your investment approach to reflect fundamental changes in the business case.  TRA for example been doing amazing work with their Tina marketing campaign and nearly doubled market share in the last 4 years.  Some of us recognized the brilliance of their new marketing years ago, (I guess I was a bit fortunate to study marketing at university, so I saw the true brilliance of their new approach very early), and got on board in the big way and have done very handsomely indeed.  HGH have also changed their approach a lot in recent years with massive growth in their low risk reverse mortgage business.  I think there will be ongoing very strong growth in that in the years ahead fueled by elderly folks struggling to live comfortably.  I think they have learned their lesson with investments like Harmoney. and lending to numpties without any security.

I totally get why some people prefer boring infrastructure stocks and there's certainly no harm in having some in a well-diversified portfolio to lower one's overall risk.  Average analyst target price is fair value of nearly $5 so who knows, maybe you are overdue for a decent win and it will all come right for you.  At least with this one, you are getting a decent yield. Good luck with it.

So, is this it, the turning point, or just another kitty bottom? Been in the red for a while now, hitting the year low yesterday of $4.005c. Hasn't been this low since covid scare March 2020, whether there is a rebound similar to then is another story. I do get a feeling of it been oversold.     

Quote from: seaweed on May 31, 2024, 12:39 PMSo, is this it, the turning point, or just another kitty bottom? Been in the red for a while now, hitting the year low yesterday of $4.005c. Hasn't been this low since covid scare March 2020, whether there is a rebound similar to then is another story. I do get a feeling of it been oversold.     

Grossly oversold my friend, just overseas funds continuing to sell down due to their mistrust of the NZ economy right now, hang tight and add if you can. PS-End of the month so expect some action on close either way and its the last day of sell in May and go away today as well.

Quote from: Breezy on May 31, 2024, 12:54 PMGrossly oversold my friend, just overseas funds continuing to sell down due to their mistrust of the NZ economy right now, hang tight and add if you can. PS-End of the month so expect some action on close either way and its the last day of sell in May and go away today as well.

Have been catching falling knives lately and have picked 10 bottoms since 8/5/24 and 9 near bottoms which includes 2 near bottoms in last 2 days. I call it the scatter gun approach. ;D     

Quote from: seaweed on May 31, 2024, 01:21 PMHave been catching falling knives lately and have picked 10 bottoms since 8/5/24 and 9 near bottoms which includes 2 near bottoms in last 2 days. I call it the scatter gun approach. ;D     

I have too and bleeding red from them all. In fact bleeding red everywhere  :'(

Quote from: Breezy on May 31, 2024, 12:54 PMGrossly oversold my friend, just overseas funds continuing to sell down due to their mistrust of the NZ economy right now, hang tight and add if you can. PS-End of the month so expect some action on close either way and its the last day of sell in May and go away today as well.

wow up 14.5c, is it on the turn or just....whatever. Am happy chappy with that close.  :D 

Quote from: 850man on May 31, 2024, 04:34 PMI have too and bleeding red from them all. In fact bleeding red everywhere  :'(

You will have to be happy with that close.

Quote from: seaweed on May 31, 2024, 05:08 PMwow up 14.5c, is it on the turn or just....whatever. Am happy chappy with that close.  :D 

Just the end of month book squaring Mr Seaweed with a massive volume, not expecting it to stay at this price next week without a drop first so sold a good number for a loss ready to buy back more next week.

Quote from: Breezy on May 31, 2024, 05:12 PMJust the end of month book squaring Mr Seaweed with a massive volume, not expecting it to stay at this price next week without a drop first so sold a good number for a loss ready to buy back more next week.

Ditto, only sold 6% of my holding. Have a good feeling about this stock after seeing buyers coming in and buying near 9,000,000 at $4.175 on close. I will also be topping up again next week on the dip. I see Aussi also looking strong and  closing up 7c to A$3.80c which is about NZ$4.11c. Am looking forward to next Tuesday to hoover up more before it takes off again to maybe $5.00 something leading up to next div in Sept. ;)

Quote from: Basil on May 20, 2024, 10:49 AMNo way SPK qualifies as deep value.  Average of all analysts has them on a forward FY25 PE of 17.4 and that's after the fall.  https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/

Deep value is single digit PE's and extreme value is single digit PE's with the genuine prospect of good earnings growth in the years ahead.  HGH and TRA are classic examples of deep value plays. I don't think deep value / GARP buying strategies is something that's well understood on here at all.  It's all TA this and TA that.  Very few have the gonads to buy without TA support and some others who follow TA seem happy to hold stocks in a well-entrenched downtrend, go figure?

Hey Bas, has the worm turned. 3.91 low on 19/6/24 looks like up the last 3 days $4.50 here we come 8) 

Quote from: seaweed on Jun 27, 2024, 03:43 PMHey Bas, has the worm turned. 3.91 low on 19/6/24 looks like up the last 3 days $4.50 here we come 8) 

Not really following it, sorry mate.    Have a great weekend buddy.

Closed at $4.09. Was $4.10 a decade ago. Land crab of a share. A lot of talk and nice presentations though.

Quote from: Mos on Jul 10, 2024, 09:06 PMClosed at $4.09. Was $4.10 a decade ago. Land crab of a share. A lot of talk and nice presentations though.

just checking the 10 year chart. It was below $3 ten years ago and in an uptrend ever since. Good buying in the $3.90 to $4.20 bracket. Very hard buying in below $4. Last time at $4 was covid scare 4 years ago. I have broken all the rules on this one, eggs in basket etc. Normally when I post on here the sp goes down which am hoping for today, am needing to buy an extra 10,000 to get to my target.  ???   

Quote from: Mos on Jul 10, 2024, 09:06 PMClosed at $4.09. Was $4.10 a decade ago. Land crab of a share. A lot of talk and nice presentations though.

A whole decade of consistent big divvies, nice crab.

Quote from: Breezy on Jul 12, 2024, 10:10 AMA whole decade of consistent big divvies, nice crab.

Hey Breezy looks like SPK on the move again. Could be divy hunters coming back. Sp in little uptrend since 24 June LOL. The 10 day MA1 crossed over the 30 day MA2 in early July. Where to from here 4.50 or back to 5 :-X

Quote from: seaweed on Jul 29, 2024, 02:02 PMHey Breezy looks like SPK on the move again. Could be divy hunters coming back. Sp in little uptrend since 24 June LOL. The 10 day MA1 crossed over the 30 day MA2 in early July. Where to from here 4.50 or back to 5 :-X

Looks like the 30 day MA1 has just crossed over the 60 day MA2 yesterday. SPK up 13% in last 6 weeks from its low of $3.91c on 19/6/24. Anyone else on this forum take advantage of the $3.90s to $4.20s offerings in last few weeks. Good on you if you did, but don't know how far it will run plus div on the horizon will help sp move along.   

Quote from: seaweed on Aug 02, 2024, 09:56 AMLooks like the 30 day MA1 has just crossed over the 60 day MA2 yesterday. SPK up 13% in last 6 weeks from its low of $3.91c on 19/6/24. Anyone else on this forum take advantage of the $3.90s to $4.20s offerings in last few weeks. Good on you if you did, but don't know how far it will run plus div on the horizon will help sp move along.   

I've read Snoopy's posts re IFT v SPK on the other channel with interest. 
SPK certainly looking ok in the short term .

However as a longer term investor I prefer IFT (which is currently experiencing some short term post Cap Raise profit taking/correction, but IMO has a much stronger longer term FY25/26 position.)

I suspect you are more of a short term investor/dividend hound, and I wish you well with SPK.

Quote from: Left Field on Aug 02, 2024, 10:51 AMI've read Snoopy's posts re IFT v SPK on the other channel with interest. 
SPK certainly looking ok in the short term .

However as a longer term investor I prefer IFT (which is currently experiencing some short term post Cap Raise profit taking/correction, but IMO has a much stronger longer term FY25/26 position.)

I suspect you are more of a short term investor/dividend hound, and I wish you well with SPK.

Yes that is right x2. Me div hound plus trader. Had a weeks break in Gold Coast and ignored the market. Noticed the 30 day MA has crossed over the 60 day MA last week. Now back in the green by 48k and waiting.   

Latest result......... BAU..........  SP down on opening.

https://api.nzx.com/public/announcement/436700/attachment/425422/436700-425422.pdf

• Reported and adjusted1 Revenue2, EBITDAI3 and NPAT4 declined
• Mobile service revenue surpassed $1 billion for the first time and IT products, data centres,
and high-tech continued to grow
• Growth offset as economic conditions impacted IT services demand, competition intensified
in business mobile, and lower consumer spending impacted mobile devices and accessories
• SPK-26 Operate Programme accelerated in H2, but could not adapt the cost base to
changing demand quickly enough, with benefits to be largely realised in FY25
• On-market share buy-back concluded5 and total FY24 dividend of 27.5 cents per share
declared, 100% imputed

FY25 guidance
Spark provided the following guidance for FY25, subject to no adverse change in operating
outlook:
• EBITDAI: $1,165 - $1,220 million
• Capital expenditure: ~$460 - $480 million
• Total dividend per share: 27.5 cents per share, 75% imputed

Quote from: Left Field on Apr 27, 2024, 03:01 PMSpoiler alert..... I don't hold SPK, ( but own Vodafone via IFT)

That said, I've enjoyed reading Snoopy's recent SPK posts on the other chanel.  Check them out. He rates SPK as a possible buy or top-up at current low SP levels.

SPK has been a good Div/yield stock to-date for holders, however these dividends have arguably been supported by SPK's history of asset sales. IMO the question that needs to be asked is how sustainable are SPK's divvies going forward?  This Q also possibly explains a little of SPK's recent SP weakness.

Yep, divvy sustainability is the big question in my mind. Long term though I have no worries about Spark - it's the biggest player in a very necessary growth industry. The current austerity-minded Government has weakened demand for its services, but that - like this Government - is just a temporary blip.
 
SP is getting hammered this morning. A good buy imo, the concerns about the divvy notwithstanding.

Quote from: LoungeLizard on Aug 23, 2024, 10:33 AMYep, divvy sustainability is the big question in my mind. Long term though I have no worries about Spark - it's the biggest player in a very necessary growth industry. The current austerity-minded Government has weakened demand for its services, but that - like this Government - is just a temporary blip.
 
SP is getting hammered this morning. A good buy imo, the concerns about the divvy notwithstanding.

Interesting - their 2014 EPS was 18 cts, and 2024 is 17 cts. OK - both not their flashest years, but even the average EPS over the last decade was just 25 cents - so, yes, they clearly pay their admittedly juicy dividend by taking from the substance. What possibly can go wrong?

While I agree that NZ is likely to keep a number two in their communication duopoly (and why not using the existing infrastructure? ) - not quite sure I see the current prices as a "Good Buy". How do you measure that?

Discl: not holding and its a long time ago that I last saw a reason to use their services ...

Quote from: BlackPeter on Aug 23, 2024, 11:34 AMInteresting - their 2014 EPS was 18 cts, and 2024 is 17 cts. OK - both not their flashest years, but even the average EPS over the last decade was just 25 cents - so, yes, they clearly pay their admittedly juicy dividend by taking from the substance. What possibly can go wrong?

While I agree that NZ is likely to keep a number two in their communication duopoly (and why not using the existing infrastructure? ) - not quite sure I see the current prices as a "Good Buy". How do you measure that?

Discl: not holding and its a long time ago that I last saw a reason to use their services ...

I measure it by comparing it to the historical price. You have to go a long, long way back to find the SP at levels they have been at recently. The past may not be perfect indicator of the future, but it's not a bad place to start.

P/E of 22.6 at $3.95 with no demonstrated ability to grow eps or share price over the past decade - does not seem    compelling value.

Quote from: LoungeLizard on Aug 23, 2024, 12:40 PMI measure it by comparing it to the historical price. You have to go a long, long way back to find the SP at levels they have been at recently. The past may not be perfect indicator of the future, but it's not a bad place to start.

I think you might find that historic share prices are rarely a good indicator for the future. Just remember the poor sods who bought into Synlait at $6 (which was a steal, given that the same share was only months earlier worth nearly twice of that. But hey, just pick your own favourite example for markets getting it wrong for a long time and suddenly waking up - there are so many.

All shares come with a decent amount of hype (sometimes positive, sometimes negative), but at the end it is only the future earnings potential which counts, as Mos nicely indicated.

The only sensible reason to pay $4 for a company which used to deliver over a long time earnings in the mid 20-cents range pa without any growth would be if I can assume things change and the company is from now on delivering solid growth. Not sure, though, where this growth should come from? While no doubt communication stays important - what I noticed as user is that my budget for telecommunication services shrunk significantly over the years ... despite services as such much improving.

Its tough to keep (or grow) earnings in a shrinking fee pie.

Quote from: Mos on Aug 23, 2024, 02:18 PMP/E of 22.6 at $3.95 with no demonstrated ability to grow eps or share price over the past decade - does not seem    compelling value.

Always been seen as a dividend stock

Current 8,3% pretty attractive for those punters

Quote from: winner (n) on Aug 23, 2024, 03:32 PMAlways been seen as a dividend stock

Current 8,3% pretty attractive for those punters

8.3% ? Ah, I see you add the imputation credits, do you?

But no matter how you calculate it, it is a quite good dividend. The only worry for any forward looking investor would be how long they will be able to keep paying a dividend higher than their earnings?

But hey, why worry about the fountain to dry up, as long as their is still some water left ... ? I see NTA is still 41 cts per share - this could pay for 10 more years popping up the dividend. No worries, all good!

Quote from: winner (n) on Aug 23, 2024, 03:32 PMAlways been seen as a dividend stock

Current 8,3% pretty attractive for those punters

Yes bond proxy seems the case for holding. Sustainability of the current yield will be interesting with adjusted eps of 18.9 cps and dividend of 27.5 cps. Will require some eps growth at some stage to keep dividends rolling at the level shareholders have enjoyed to date. Pretty aggressive dividend policy.

Quote from: Mos on Aug 23, 2024, 04:11 PMYes bond proxy seems the case for holding. Sustainability of the current yield will be interesting with adjusted eps of 18.9 cps and dividend of 27.5 cps. Will require some eps growth at some stage to keep dividends rolling at the level shareholders have enjoyed to date. Pretty aggressive dividend policy.

Theresa cut the divie once .... All hell broke out

Quote from: winner (n) on Aug 23, 2024, 04:33 PMTheresa cut the divie once .... All hell broke out

Good point - must still be top of mind for the Board.

They must have had an interesting discussion around the Board table along the lines of...

"we are already paying out way more in dividends than we are earning in NPAT"
"revenue and earnings are down this year"
"lets go ahead and increase the dividend this year"

Quote from: BlackPeter on Aug 23, 2024, 03:31 PMI think you might find that historic share prices are rarely a good indicator for the future. Just remember the poor sods who bought into Synlait at $6 (which was a steal, given that the same share was only months earlier worth nearly twice of that. But hey, just pick your own favourite example for markets getting it wrong for a long time and suddenly waking up - there are so many.

All shares come with a decent amount of hype (sometimes positive, sometimes negative), but at the end it is only the future earnings potential which counts, as Mos nicely indicated.

The only sensible reason to pay $4 for a company which used to deliver over a long time earnings in the mid 20-cents range pa without any growth would be if I can assume things change and the company is from now on delivering solid growth. Not sure, though, where this growth should come from? While no doubt communication stays important - what I noticed as user is that my budget for telecommunication services shrunk significantly over the years ... despite services as such much improving.

Its tough to keep (or grow) earnings in a shrinking fee pie.

You don't think telecommunications, digital and data services, cloud technology - not to mention Ai - is going to produce growth?

There are indeed a lot of examples - Synlait being one - where the SP has gone off a cliff leaving investors stranded, but in those cases there has been a significant event or a drop in demand of services to produce that sort of correction. There's a few things - the general depressed economy being one of them - that are impacting Spark, but not in a way that would account for the SP to fall to levels that are more less unprecedented.

I see Spark as a defensive stock in an essential industry, at a historically cheap price, that will recover and continue to pay a good return in the meantime, even if the divvy needs to be trimmed at some point. 

Quote from: LoungeLizard on Aug 23, 2024, 05:09 PMYou don't think telecommunications, digital and data services, cloud technology - not to mention Ai - is going to produce growth?

I assume you meant that as rhetorical question - but you left it as wide open as a farm gate with the most important parameters undefined, which means its hard to answer this question.

Telecommunications: No doubt the impact of telecommunications on our lives did grow for the last 100 years or so. However - telecommunications is a vast area. It started with digging trenches, laying copper lines and employing thousands of girls as switch exchange operators. The companies who grew with that (and it was really big business) have moved on since than. No money anymore in any of that.

Many steps followed - automation, digitalisation - and than moving everything from dedicated lines onto the Internet and - wireless of course. Some really big companies involved in any of the steps and lots of money did flow (and stopped with the next step), but -  do you see Chorus really as the next big thing?

You mentioned some current hot topics and sure - some companies make money with the cloud (amazon, google) and some others have currently thanks to the cloud hype inflated share prices (IFT is close to us, so I mention them). Time will tell who really will get rich with providing cloud services before they are just another boring commodity and the margins are slim as pin-up girls. Actually - one could argue, that's where we already are. I use the cloud, the phone and the internet and the cost are neglectable compared to just my telephone bill 30 years ago.

AI: You know anybody really making money with that technology? I don't. Of course everybody is pouring money into it, but this is different from harvesting sustainable earnings. But I guess its still early days, so - who knows. What I however know is that if AI becomes the next big thing (and not just the next hype after breeding ostriches), than it will be a very small number of very big companies who will harvest this money. Think Google, Microsoft or similar. Spark however? Yeah, right.

Lets face it - Spark is an insignificant and easy replaceable intermediary between the Southern Cross Cable and peoples cell phones and computers. Nothing they are doing is special or unique - and their margins will get slimmer and slimmer.

So, no - I don't think that in any of the buzzwords you mentioned is financial growth for their specific slice of the industry.

Quote from: LoungeLizard on Aug 23, 2024, 05:09 PM...

I see Spark as a defensive stock in an essential industry, at a historically cheap price, that will recover and continue to pay a good return in the meantime, even if the divvy needs to be trimmed at some point. 

Defensive - maybe, though it could be as defensive as the shares of the light rail operators in the early 20th century. I know - we haven't been around in that time, but light rail was the next big thing. The question is, whether they (Spark) are in the long term a good place to park ones money ... and this I doubt.

What do you think will happen to the share price when (not if) they can't pay anymore their juicy dividend?

Right - I think the term is "dividend trap", isn't it?

I love these market hissy fits, great buying opportunity right here, Mr Market has severe short sightedness.
Watch the punters flock to this stock after a couple more interest rate cuts by the RB.

Quote from: BlackPeter on Aug 23, 2024, 06:17 PMI assume you meant that as rhetorical question - but you left it as wide open as a farm gate with the most important parameters undefined, which means its hard to answer this question.

Telecommunications: No doubt the impact of telecommunications on our lives did grow for the last 100 years or so. However - telecommunications is a vast area. It started with digging trenches, laying copper lines and employing thousands of girls as switch exchange operators. The companies who grew with that (and it was really big business) have moved on since than. No money anymore in any of that.

Many steps followed - automation, digitalisation - and than moving everything from dedicated lines onto the Internet and - wireless of course. Some really big companies involved in any of the steps and lots of money did flow (and stopped with the next step), but -  do you see Chorus really as the next big thing?

You mentioned some current hot topics and sure - some companies make money with the cloud (amazon, google) and some others have currently thanks to the cloud hype inflated share prices (IFT is close to us, so I mention them). Time will tell who really will get rich with providing cloud services before they are just another boring commodity and the margins are slim as pin-up girls. Actually - one could argue, that's where we already are. I use the cloud, the phone and the internet and the cost are neglectable compared to just my telephone bill 30 years ago.

AI: You know anybody really making money with that technology? I don't. Of course everybody is pouring money into it, but this is different from harvesting sustainable earnings. But I guess its still early days, so - who knows. What I however know is that if AI becomes the next big thing (and not just the next hype after breeding ostriches), than it will be a very small number of very big companies who will harvest this money. Think Google, Microsoft or similar. Spark however? Yeah, right.

Lets face it - Spark is an insignificant and easy replaceable intermediary between the Southern Cross Cable and peoples cell phones and computers. Nothing they are doing is special or unique - and their margins will get slimmer and slimmer.

So, no - I don't think that in any of the buzzwords you mentioned is financial growth for their specific slice of the industry.


Defensive - maybe, though it could be as defensive as the shares of the light rail operators in the early 20th century. I know - we haven't been around in that time, but light rail was the next big thing. The question is, whether they (Spark) are in the long term a good place to park ones money ... and this I doubt.

What do you think will happen to the share price when (not if) they can't pay anymore their juicy dividend?

Right - I think the term is "dividend trap", isn't it?

Fair enough. I disagree with your analysis, it all seems a bit of a stretch to think that Spark - and Infratil - won't be at the forefront of the telecommunications, data and digital services for some time to come. Let's see where the SP and the business is in 5 years. I'm comfortable holding the stock for that sort of time period. I agree with Breezy, this is a great - almost historic - buying opportunity.

I'm happy to see they've reinstated the DRP and are offering a 3% discount as a long term holder I'll be happy to take that.

I was not thrilled to see the 2025 dividend won't be fully imputed but I think the datacentre plan to more than triple capacity is still a good strategy and should hopefully yield benefits in a couple of years time.

https://www.nzherald.co.nz/business/hundreds-of-jobs-on-line-as-spark-aims-to-cut-50-million-in-labour-costs/BH7PNVR4VFEZHH34UEMLU633OQ/
Paywalled.  Doubts expressed by analysts as to whether the dividend is sustainable.

Quote from: Basil on Aug 26, 2024, 11:30 AMhttps://www.nzherald.co.nz/business/hundreds-of-jobs-on-line-as-spark-aims-to-cut-50-million-in-labour-costs/BH7PNVR4VFEZHH34UEMLU633OQ/
Paywalled.  Doubts expressed by analysts as to whether the dividend is sustainable.

Just as well some of us consider analysts opinions bollocks, even if it got a trim it wouldn't be for long, might pay to take a look at the divvy history. PS-I often wonder if skiing near 100kph at times is sustainable for an old fella but seems to be so SPK divvy should be okay.

Michael Schumacher thought he was fast and cool on the ski's too. 

Quote from: Basil on Aug 26, 2024, 06:27 PMMichael Schumacher thought he was fast and cool on the ski's too. 

Go hard or go home but actually his accident didn't occur at high speed, it occurred during an off trail traverse. Most ski injuries actually happen whilst mounting and particularly dismounting ski lifts. The biggest risk you can take is driving your car.

SPK SP taking quite a hammering since the results.......  down another 4% to $3.62 today.

TA looking ominous.

Quote from: Left Field on Aug 28, 2024, 04:32 PMSPK SP taking quite a hammering since the results.......  down another 4% to $3.62 today.

You  need to complain with LL - he disagreed with our analysis. For everybody else I think the development is quite predictable.

FTBIADT = Fear to Buy into a Dividend Trap?

Ah yes, and never try to catch a falling knife ...

Quote from: Left Field on Aug 28, 2024, 04:32 PMSPK SP taking quite a hammering since the results.......  down another 4% to $3.62 today.

TA looking ominous.

The TA is terrible, best to avoid putting in capital, or more capital, until it turns.

Bear in mind this is a big boys stock, and to put through volume at such a declining SP says to stay away until they change their mind and want back in. It should be obvious when they do, like as obvious as it is now that they don't.

Despite being a dividend trap, currently at 9.9% gross dividend, it is a trap worth falling into - at the right SP, gross div could get even better!.

Quote from: Left Field on Aug 28, 2024, 04:32 PMSPK SP taking quite a hammering since the results.......  down another 4% to $3.62 today.

TA looking ominous.

Who cares about ominous TA when you have a long term outlook, let others sell for a loss and stay the course. A year from now once interest rates have been slashed the herd will be piling back into this stock. Disc-My 2nd largest holding.

Quote from: Breezy on Aug 28, 2024, 06:23 PMWho cares about ominous TA when you have a long term outlook, let others sell for a loss and stay the course. A year from now once interest rates have been slashed the herd will be piling back into this stock. Disc-My 2nd largest holding.

Yep - in the short term a 14c dividend coming up at a price of $3.62? I'll take that everyday of the week. As for the long term, I don't have any doubts at all that the SP will recover and the dividend, although it may be cut, will still be compelling. 

Reading through this thread, there are a couple of things weighing on the sp. missing the guidance and more importantly future Div funding. How will skp cover this in the future?

Quote from: Ricky Bobby on Aug 29, 2024, 07:58 AMReading through this thread, there are a couple of things weighing on the sp. missing the guidance and more importantly future Div funding. How will skp cover this in the future?

Through growth in key areas and expanding in those areas/Innovation and streamlining/cost cutting. The market is a very unreliable indicator whilst its firing from the hip, see how it looks a year from now, its a wet and forget income stock for the majority of retail punters and has been for yonks.

Quote from: Breezy on Aug 29, 2024, 08:26 AMThrough growth in key areas and expanding in those areas/Innovation and streamlining/cost cutting. The market is a very unreliable indicator whilst its firing from the hip, see how it looks a year from now, its a wet and forget income stock for the majority of retail punters and has been for yonks.

I joined the 3.60s wet and forget club yesterday. Hoping to make at least 50c out of this over soldness.

Quote from: seaweed on Aug 30, 2024, 09:21 AMI joined the 3.60s wet and forget club yesterday. Hoping to make at least 50c out of this over soldness.

Yep, did the same  ;D

Yesterday's close $3.52 almost at its 52 week low........I'm a tab surprised the SPK SP hasn't felt some Data Centre love/appreciation following the Blackstone Aussie Data Centre purchase.

Either it's too soon....or...
... the market is showing more concerns about SPK's ability to retain Dividend yields while funding the $ hungry data centres.

Interesting to watch how this plays out.

At 3.52 the dividend would still provide a decent yield even after a 30% hair cut.

Quote from: Glenorchy on Sep 06, 2024, 12:45 PMAt 3.52 the dividend would still provide a decent yield even after a 30% hair cut.

Of course SPK's current Div yield is great...Divvie hunters love it..... the question the market seems to be asking is whether the current yield is sustainable as stated in post #109.

Disc - don't hold  - just watching with interest.

I'm not talking about the current div yield I'm talking about the yield after the dividend is cut by say 30% for example. Sorry I'm not sure my comment was clear enough.

I'm saying if you buy at a price like 3.52 if the div was cut by 30% the div yield would still be well above what you can now get on a 1 year TD at a big 4 bank. If you cut the dividend by 40% the yield at a share price of 3.52 is still over 5%. So unless you think they are going to drastically drop the dividend it doesn't need to be sustainable at the current level for the yield to be ok does it? So I'm not sure that div yield would be the concern that drives it lower from here if it goes lower... and in fact even at 3.60 or 3.70 share price etc the div yield even if the dividend is cut by as much as 30 or 40% is still worthwhile in the context of a dividend portfolio imo ymmv

Quote from: Glenorchy on Sep 06, 2024, 02:29 PMI'm saying if you buy at a price like 3.52 if the div was cut by 30% the div yield would still be well above what you can now get on a 1 year TD at a big 4 bank. If you cut the dividend by 40% the yield at a share price of 3.52 is still over 5%. So unless you think they are going to drastically drop the dividend it doesn't need to be sustainable at the current level for the yield to be ok does it?

Best to compare apples with apples because that's what the market does.  What the yield is on a different lower risk asset class, (1 year term deposit) is not what's relevant.  What yield you can get on other shares on the NZX is what's relevant. I suspect the pain of lower revenues from SPK's IT division they have recently felt, is just the beginning of that story.  Buying shares in a strong downtrend is usually not a good idea, at least in the short term.  It's got all the classic makings of a dividend trap with absolutely no prospect whatsoever of dividends ever going up.  That's how I see it. 

QuoteQuote KW in another thread.  Every man and his dog is jumping on the "lets build data centres" bandwagon.  I predict it will end in tears (for shareholders).  Because its just the same old cycle repeating - like railroads in the 1800s to fibre networks in the 2000s

I do wonder with the cost of capital so high now, how long before SPK's data center will be eps accretive ?

Non holders shouldn't concern themselves about SPK, great long term hold, just spray and walk away.
Such a gift for those able to buy at current insanely discounted prices.
Bet the price will be well north of where it is now in a couple of yrs time.

Quote from: Basil on Sep 06, 2024, 04:28 PMBest to compare apples with apples because that's what the market does.  What the yield is on a different lower risk asset class, (1 year term deposit) is not what's relevant.  What yield you can get on other shares on the NZX is what's relevant. I suspect the pain of lower revenues from SPK's IT division they have recently felt, is just the beginning of that story.  Buying shares in a strong downtrend is usually not a good idea, at least in the short term.  It's got all the classic makings of a dividend trap with absolutely no prospect whatsoever of dividends ever going up.  That's how I see it.   

Fair enough.

I view Spark as a bond-proxy and so sensitive to interest rates and TD's are just one weather vane of interest rate direction and levels. Of course Spark is not the same as a TD.

If you want to compare Spark with other equities:

At the current dividend if the SP was $3.60 (and it's currentky $3.52)  Spark would have the highest dividend yield on the NZX.

If you cut it's dividend by 30% at a SP of $3.60 it would have the 12th highest dividend yield and how sustainable a few above it are, is equally dubious.

The overall point stands. Clearly there are many who agree with your view it is being savagely sold down hardly a vote of confidence in it's prospects but I am not sure concerns about the sustainability of it's yield fully explain the sell-off.

I am watching it carefully I have not pulled the trigger but it's definitely of interest to me for my income portfolio. I appreciate it's not for everyone.

Quote from: Breezy on Sep 06, 2024, 06:58 PMNon holders shouldn't concern themselves about SPK, great long term hold, just spray and walk away.
Such a gift for those able to buy at current insanely discounted prices.
Bet the price will be well north of where it is now in a couple of yrs time.

It might be educational to review the posts in other threads where the share price is (or was) going downhill. The posts of the supporters all sound similar ... and while I can understand if there are arguments about fundamental value (the market does have a habit of under as well as overpricing assets), the fact that a share used to be more expensive in the past is never a good argument for calling it "discounted". Always consider that the market might  just have overvalued the asset in the past (like e.g. with SML or ATM) or the fundamentals might have changed.

Why exactly do you think that Spark is currently discounted? The PE is still above 15 (at SP $3.52) and the historic earnings growth per share is slightly negative. I don't see a reason why this should change either. Trim the price to 2/3rds of the current value (i.e. around $2.30) - and it is still not cheap, but at least fairly priced.   

Quote from: BlackPeter on Sep 07, 2024, 11:15 AMIt might be educational to review the posts in other threads where the share price is (or was) going downhill. The posts of the supporters all sound similar ... and while I can understand if there are arguments about fundamental value (the market does have a habit of under as well as overpricing assets), the fact that a share used to be more expensive in the past is never a good argument for calling it "discounted". Always consider that the market might  just have overvalued the asset in the past (like e.g. with SML or ATM) or the fundamentals might have changed.

Why exactly do you think that Spark is currently discounted? The PE is still above 15 (at SP $3.52) and the historic earnings growth per share is slightly negative. I don't see a reason why this should change either. Trim the price to 2/3rds of the current value (i.e. around $2.30) - and it is still not cheap, but at least fairly priced.   

The market does what it does, it overshoots and undershoots and every now and then it even gets it just right
I see it back to around $4.50 within 2 yrs so as a long term hold I'm completely unfazed by the current time of instability.
No offense but I see your $2.30 mention as nonsense just as I saw some mentioning FPH as only being worth $10-$15 as nonsense.

https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/consensus/
Oddly enough the average of 9 analysts agree with you and have an average target price of $4.62
Good luck with getting ATM up to your price target of $30 though.

Quote from: Basil on Sep 07, 2024, 05:32 PMhttps://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/consensus/
Oddly enough the average of 9 analysts agree with you and have an average target price of $4.62
Good luck with getting ATM up to your price target of $30 though.

I highly doubt anyone including myself has had a tp of $30 for ATM for many years now, it was once a possibility on its growth trajectory at the time.

Quote from: Breezy on Sep 07, 2024, 04:58 PMNo offense but I see your $2.30 mention as nonsense

Ben Graham reckoned no growth stocks are worth a PE of no more than 8.5
According to market screener the average of 9 analysts has eps forecasted at 22.5 cps in FY27, much the same as the 21.9 cps earned 5 years earlier in FY22.  So no growth in 5 years and eps of 22.5 cps.
Ben would say such a company is worth 8.5 times 22.5 cps = $1.91.  But he was just a silly old fool and they didn't have data centers back then so this time its completely different eh and you're far cleverer than he ever was ;).

Quote from: Basil on Sep 07, 2024, 10:05 PMBen Graham reckoned no growth stocks are worth a PE of no more than 8.5
According to market screener the average of 9 analysts has eps forecasted at 22.5 cps in FY27, much the same as the 21.9 cps earned 5 years earlier in FY22.  So no growth in 5 years and eps of 22.5 cps.
Ben would say such a company is worth 8.5 times 22.5 cps = $1.91.  But he was just a silly old fool and they didn't have data centers back then so this time its completely different eh and you're far cleverer than he ever was ;).

Stop making it personal, I don't invest in or own SPK shares for any reason to do with Ben Graham and I have no idea of his IQ score. How about focussing on your down trodden HGH stock which you actually hold or do you?

Quote from: Breezy on Sep 08, 2024, 07:51 AMStop making it personal, I don't invest in or own SPK shares for any reason to do with Ben Graham and I have no idea of his IQ score. How about focussing on your down trodden HGH stock which you actually hold or do you?

I suggest you should handwrite your first paragraph hundred times, memorize it and then ask for forgiveness.

Quite personal, offensive and - if I may say so, quite dumb post.

Ben Graham was one of Warren Buffetts teachers - just look at how this worked out for him :p ); Ah yes, but you probably don't know either who Warren Buffett is, do you?

But apart from that - plain common sense would tell you that investors expect from a higher risk investment long term a higher return than they can get from (basically risk free) Kiwi-bonds. But maybe you don't know common sense either?

Spark could pay this increased reward in future only if they print the money they need to pay their dividends in their cellar - and I doubt this would be in the long run a sustainable strategy.

Quote from: Basil on Sep 07, 2024, 10:05 PMBen Graham reckoned no growth stocks are worth a PE of no more than 8.5
According to market screener the average of 9 analysts has eps forecasted at 22.5 cps in FY27, much the same as the 21.9 cps earned 5 years earlier in FY22.  So no growth in 5 years and eps of 22.5 cps.
Ben would say such a company is worth 8.5 times 22.5 cps = $1.91.  But he was just a silly old fool and they didn't have data centers back then so this time its completely different eh and you're far cleverer than he ever was ;).

From your posts it looks as though you ignore market analysts, and then quote them as scripture, when it suits.

And again, you seem to deride the eps and dividend history of Spark, presumably as a warning not to invest, but then you promote HGH who have cut their dividends, EPS has not just stalled but gone backwards, and as for their share price history, well lets just not mention that at all shall we? Again, there seems to be an inconsistency of approach.

Also, back of the envelope PE calculations (as employed by all good, completely independent and objective analysts) are all well and good, but they are a starting, not finishing point. They can sometimes lead one not to be able to see the wood for the trees. Or the blue chip stocks from the chancers. 

 

Quote from: LoungeLizard on Sep 08, 2024, 05:45 PMFrom your posts it looks as though you ignore market analysts, and then quote them as scripture, when it suits.

And again, you seem to deride the eps and dividend history of Spark, presumably as a warning not to invest, but then you promote HGH who have cut their dividends, EPS has not just stalled but gone backwards, and as for their share price history, well lets just not mention that at all shall we? Again, there seems to be an inconsistency of approach.

Also, back of the envelope PE calculations (as employed by all good, completely independent and objective analysts) are all well and good, but they are a starting, not finishing point. They can sometimes lead one not to be able to see the wood for the trees. Or the blue chip stocks from the chancers. 

 

Runs with the hares and hunts with the hounds comes to mind.

Quote from: BlackPeter on Sep 08, 2024, 05:07 PMI suggest you should handwrite your first paragraph hundred times, memorize it and then ask for forgiveness.

Quite personal, offensive and - if I may say so, quite dumb post.

Ben Graham was one of Warren Buffetts teachers - just look at how this worked out for him :p ); Ah yes, but you probably don't know either who Warren Buffett is, do you?

But apart from that - plain common sense would tell you that investors expect from a higher risk investment long term a higher return than they can get from (basically risk free) Kiwi-bonds. But maybe you don't know common sense either?

Spark could pay this increased reward in future only if they print the money they need to pay their dividends in their cellar - and I doubt this would be in the long run a sustainable strategy.

What are you on about? Best not to interfere with answers to others unless you interpret the post correctly which you haven't. My post  was a response to Basil using sarcasm as a personal put down.

Quote from: BlackPeter on Sep 08, 2024, 05:07 PMSpark could pay this increased reward in future only if they print the money they need to pay their dividends in their cellar - and I doubt this would be in the long run a sustainable strategy.

But but but but but but but ........
(Zorry just varming up ze Fokker triplane in ze background for a run)

----------------------

Vas not Spark ze company zhat zold zome aging metal tripods of minimal 'scrap metal value', and littered over various obscure mountain locations vor a profit of $583m (or 31.6cps) on 14th October 2022?

Ah you say a 'one off'.

But then eef you give any credence to the rantings of my 'dogmatic fur-ball foil' (whose name must not be mentioned) at that other place (whose name should not be mentioned).   He eez zaying zhat ze Spark datacentre portfolio on a DCF basis eez vorth $845.4m or

$845.4m / 1,814.2m = 46.6cps

And how much cash have Spark put into building zheir 'data-centre portvolio' zo far?   Answer $235m.  Zo ze projected profit of a zale today vould be:  $845.4m-$235m = $610.5m

Ah you counter.  Zhis $845.4m eez nothing more zhan a 'pie in ze sky' valuation!   Unlike ze 'cell towers' ze 'data centre portvolio' as valued does not yet fully exist!

To vhich I vould reply.  Yes, you are right.  But look across ze ditch to CDC, and the 'hundreds of million dollar datacentre portfolio' that has increased in value by more zhan $500m in ze three months to 30th June 2024.  Zhat CDC portfolio does not fully exist either.  Yet international investors are still prepared to pay 'over the odds' vor such data centre promises.

Now you vill say, 'Two swallows does not make a summer'

But reach back much further and remember the sale of yellow pages for $NZ2.24billion in 2007 to the Canadian Teachers Pension Fund.  Zadly for ze buyers it is no longer vorth $NZ2.24billion today.   (It is vorth noting here  zhat NZ can ztill teach Canadian teachers a lesson)!  But vrom ze point of view of Spark, or Telecom as it vas zhen, zhis vas a very lucky transaction.

Now go back to ze last 'Three Year Strategy Plan' presentation showing the CAGR return on Spark shares over the preceding three years (slide eight).  That shows Spark beating the returns of all but one of their telecommunications contempories.  The 'defeated' being Deutsche Telekom, Telecom Malayasia, BCE, Swisscom, Vodafone Group, Telstra, BT Group and Verizon, AT&T, Orange and Singtel.    I guess all of that must have been luck as vell?   

I must zay, Spark does zeem to have been a very lucky company.  You might even say ze 'basement press in the cellar' printing money has had a good run....

------------------------

Now eef you vill excuse me, I eentend to 'don my goggles' and take off.

RB

I don't see where the growth is going to come from.  Their data center build will have to be funded by expensive debt or capital so how do they continue to pay their current dividends while contemporaneously funding the huge capex required for that?
I don't see how the analysts are getting to the mid $4's here given the lack of projected eps growth and I don't see why this should be priced in the late teens PE when there's no material projected eps growth.
While the current yield is attractive, I think there's a real risk of it not being sustainable so its not for me but each to their own and good luck to holders. 

Quote from: Basil on Sep 09, 2024, 10:44 AMI don't see where the growth is going to come from.  Their data center build will have to be funded by expensive debt or capital so how do they continue to pay their current dividends while contemporaneously funding the huge capex required for that?
I don't see how the analysts are getting to the mid $4's here given the lack of projected eps growth and I don't see why this should be priced in the late teens PE when there's no material projected eps growth.
While the current yield is attractive, I think there's a real risk of it not being sustainable so its not for me but each to their own and good luck to holders. 

See IFT's CDC valuation and EBItDA growth for an answer to your question.

Quote from: Basil on Sep 09, 2024, 10:44 AMI don't see where the growth is going to come from.  Their data center build will have to be funded by expensive debt or capital so how do they continue to pay their current dividends while contemporaneously funding the huge capex required for that?

According to a zertain 'vlea ridden pup' vrom 'zum other place'.

----------------

a/ A $30m p.a. annual reduction in IT capex as support for a shrunken IT Products division, as IT Products 'streamline their operations' (with the associated redundancies already accounted for in FY2024).
b/ $30m reduction per annum in post 5G full roll out mobile spend (mobile division) combined with
c/ Cutting the  fixed network improvement budget by $20m (once 5G is in place).  Fixed network capex has been up to invest in Multi-Access Edge Computing (MEC), which moves the computing of traffic and services from a centralized cloud to the edge of the network and closer to the customer.

This plan releases $80m in capex spend per year, which can be redirected to data centre builds.   $80m extra p.a. is likely sufficient for the proposed data centre build out, if Spark sticks to its current roll out plan with a 2031 end goal.

-------------

No need to cut dividends if vollowing ze above 'reallocation of capex' plan.

RB

Quote from: Basil on Sep 09, 2024, 10:44 AMI don't see where the growth is going to come from.  Their data center build will have to be funded by expensive debt or capital so how do they continue to pay their current dividends while contemporaneously funding the huge capex required for that?
I don't see how the analysts are getting to the mid $4's here given the lack of projected eps growth and I don't see why this should be priced in the late teens PE when there's no material projected eps growth.
While the current yield is attractive, I think there's a real risk of it not being sustainable so its not for me but each to their own and good luck to holders. 

You don't see so you don't hold which is fine but you have never shown any interest in this stock previously and now its become your new pet beat up.

The yield is currently at a level that has caught my attention but there is obviously some debate about whether that's sustainable or not.  Nothing wrong with good debate.

Hey Guys, this is a good debate. Let's keep it civilised! I have been in and out of holding, more trading because of their liquidity. Div is a bonus! RB, so this redeployment of capital would be enough to cover future capex? Would u call this growth capex or maintenance capex? Does their yearly capex spend cover their depreciation? Thanks for the help everyone!

Quote from: Ricky Bobby on Sep 09, 2024, 01:21 PMRB, so this redeployment of capital would be enough to cover future capex? Would u call this growth capex or maintenance capex? Does their yearly capex spend cover their depreciation? Thanks for the help everyone!

Vrom one RB to another!

Ze 'FY2024 results presentation' zays on page 10:
a/ "Sparks 118MW development pipeline of data centres will require $1b+ capex to finish."
b/ "Timeframe 5 to 7 years."  $1b/7= $143m per year
c/ "Datacentre capex budget for FY2025 $70m-$90m (mid point $80m)" on page 12

Potential capex redirection vrom other divisions: $30m+$30m+$20m=$80m (my post 129) added to existing budget:
($70m-$90m)+$80m = $150m-$170m.  More zhan enough to cover ze Data Centre annual $143m 'build out budget'.

Ze 'pugnacious pup' in zhat other unmentionable place has done a post on ze Spark thread zhere titled 'Capex Crisis? (post 2488).  Look and you vill see ze expenditure vent up zignificantly over FY2023 and FY2024, to cover ze roll out of 5G mobile.  Zhis expenditure vill drop back, and ze former 5G development budget vill be redirected to datacentres.  Zhis point eez not obvious unless you look back more zhan two years, as in ze Pugnacious Pup capex table.  Zhose analysts, like 'Zilly Zolly', who have not done thees and are telling their clients zhere is 'zhortage of capital' to develop datacentres are 'lazy dummkopfs' - 'vools'- and vrong!

All ze datacentre capex being talked about vill be growth capex.  Maintenance of zhose new builds zhould be minimal, at least vor a vew years.

Depreciation eez a 'non cash item'.  Zo eet eez not needed vor a 'present value of future cashflows' valuation calculation.

RB

Crikey..... just checked the TA for SPK. Unrelenting. GLH's.

Quote from: Left Field on Sep 18, 2024, 04:57 PMCrikey..... just checked the TA for SPK. Unrelenting. GLH's.

Amazing value, big boys selling and big boys buying, retail have no influence in this stock.TA stands for Take Advantage in this case. Lol
I remember when CNU was the biggest dog and went down to $1.40 odd from $4, now $9.

Quote from: Breezy on Sep 18, 2024, 05:19 PMI remember when CNU was the biggest dog and went down to $1.40 odd from $4, now $9.

Good point.  When the TA says the downtrend is over this could be a good value income stock to hold.  As leftie correctly points out, at this stage the downtrend is relentless.  I might take a modest position as an income stock when a new uptrend is eventually confirmed.  Not interested in the risk of trying to pick the bottom on this one.  Who knows where the bottom really is with the earnings multiple still quite high for a stock with no demonstrable growth to date.  I'm not sticking my neck out and saying where I think the bottom might be because some people are very quick to throw that sort of thing back at you if you are wrong.

Quote from: Basil on Sep 18, 2024, 07:34 PMGood point.  When the TA says the downtrend is over this could be a good value income stock to hold.  As leftie correctly points out, at this stage the downtrend is relentless.  I might take a modest position as an income stock when a new uptrend is eventually confirmed.  Not interested in the risk of trying to pick the bottom on this one.  Who knows where the bottom really is with the earnings multiple still quite high for a stock with no demonstrable growth to date.  I'm not sticking my neck out and saying where I think the bottom might be because some people are very quick to throw that sort of thing back at you if you are wrong.

Not concerned as its a 10 yr hold for me and I reckon it will be back to around $4.50 2 yrs from now (Happy for you to throw it back in 2 yrs if not so) Speaking of multiples, interestingly CNU had a ridiculous PE ratio but that didn't stop it getting to $9.

Quote from: Left Field on Sep 18, 2024, 04:57 PMCrikey..... just checked the TA for SPK. Unrelenting. GLH's.

Quite easy lesson to learn for holders: If TA and fundamentals agree, than dismiss their signals at your peril :);

Quote from: BlackPeter on Sep 19, 2024, 08:45 AMQuite easy lesson to learn for holders: If TA and fundamentals agree, than dismiss their signals at your peril :);

No learn the long term lesson from CNU above $1.40ish in 2013, now $9 and continued to pay dividends along the way whilst displaying awful metrics but fundamentally an essential service just like SPK. Whether you buy now or wait for a bottom you may never pick right matters little over the longer term, cheap is still cheap even when it could be cheaper or not.

Everyone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

Quote from: LoungeLizard on Sep 19, 2024, 10:49 AMEveryone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

Yes some on here get fixated on PE ratios as if its the holy grail of investing, its just one ingredient in a cake mix. They could consider that CNU had a PE ratio of up to 186 not so long ago. Lol

Quote from: Breezy on Sep 19, 2024, 09:39 AMNo learn the long term lesson from CNU above $1.40ish in 2013, now $9 and continued to pay dividends along the way whilst displaying awful metrics but fundamentally an essential service just like SPK. Whether you buy now or wait for a bottom you may never pick right matters little over the longer term, cheap is still cheap even when it could be cheaper or not.

Quote from: LoungeLizard on Sep 19, 2024, 10:49 AMEveryone knows - or should know - that just saying high PE bad, low PE good, is too simplistic. It might a rule of thumb that applies to smaller business's but not necessarily to the big business's or infrastructure stock, who have earned the right to have high PE's. Virtually all of NZ's big names have PE's equal or greater (in some cases, much greater) than SPark's current PE of 19. It's the same everywhere - Apple (30), Tesla (100). Those who slavishly follow what is just a very general rule, will have missed out on some of the best performing NZ stocks over the years.

SPK's profits and margins are getting squeezed at the moment but I have no doubt they will come right again. And, as has been noted, the current dividend is 11.6%, so a possible cut wouldn't be the end of the world, and certainly no reason for the level of selling we are seeing.

disc. holding and buying.

Quite amusing. Not really following LL (though remembering him constantly attacking some stocks with much better fundamentals than Spark), but learned a lot from Breezies "hold and buy more" messages with some of his previous holdings while they went down the gurgler.

I wish both of you that things will work out for you this time ... but clearly - none of you has Warren Buffetts successful track record, and even he occasionally gets things wrong. Would he invest into Spark given the current fundamentals? Of course not. No growth, no real moat but inertia and lack of better competition in an duopoly, unappealing valuation and mediocre board and management. The only thing they seem to be good in is keeping their NTA as close as possible to zero - but hey - light balance sheets look much prettier in times of low interest rates, don't they?

Anyhow - I guess we all agree that Spark won't go down the gurgler anytime soon. Kiwis are just ways too lethargic in changing their utilities, and admittedly - the other guys are not better either in providing a very mediocre service.

However - they are neither a monopoly, nor do they have any other unique selling proposition, other than the inertia of the masses. Long term earnings growth is slightly negative (no, this is not good :) - and there is nowhere any reason to see for why this should change in the short to medium term.

In this situation is PE a very sensible method to assess whether a company is over or undervalued.

If you allow for a mediocre service provider with a lethargic customer base a PE of say 10 (I am quite nice here ...), than Spark would be worth (based on the last 10 years earnings) $2.50 per share.

Do I know, whether the share drops that far (or further - we normally have under swings after rapid declines)? Of course not, but neither do LL nor Breezy know, whether the down trend will change anytime soon.

Sure - it might, if hype swaps the other way - but this is something nobody can predict.

So far the share has still all indicators of a dividend trap, and we probably all know how these play out.

Anyway - no interests in Spark here, other than watching the development with interest. How do they say - anything is good for something, and if its just as bad example to learn from.

Quote from: BlackPeter on Sep 19, 2024, 12:32 PMQuite amusing. Not really following LL (though remembering him constantly attacking some stocks with much better fundamentals than Spark), but learned a lot from Breezies "hold and buy more" messages with some of his previous holdings while they went down the gurgler.

I wish both of you that things will work out for you this time ... but clearly - none of you has Warren Buffetts successful track record, and even he occasionally gets things wrong. Would he invest into Spark given the current fundamentals? Of course not. No growth, no real moat but inertia and lack of better competition in an duopoly, unappealing valuation and mediocre board and management. The only thing they seem to be good in is keeping their NTA as close as possible to zero - but hey - light balance sheets look much prettier in times of low interest rates, don't they?

Anyhow - I guess we all agree that Spark won't go down the gurgler anytime soon. Kiwis are just ways too lethargic in changing their utilities, and admittedly - the other guys are not better either in providing a very mediocre service.

However - they are neither a monopoly, nor do they have any other unique selling proposition, other than the inertia of the masses. Long term earnings growth is slightly negative (no, this is not good :) - and there is nowhere any reason to see for why this should change in the short to medium term.

In this situation is PE a very sensible method to assess whether a company is over or undervalued.

If you allow for a mediocre service provider with a lethargic customer base a PE of say 10 (I am quite nice here ...), than Spark would be worth (based on the last 10 years earnings) $2.50 per share.

Do I know, whether the share drops that far (or further - we normally have under swings after rapid declines)? Of course not, but neither do LL nor Breezy know, whether the down trend will change anytime soon.

Sure - it might, if hype swaps the other way - but this is something nobody can predict.

So far the share has still all indicators of a dividend trap, and we probably all know how these play out.

Anyway - no interests in Spark here, other than watching the development with interest. How do they say - anything is good for something, and if its just as bad example to learn from.

For a non follower, you sure seem to reply to a lot of my posts, BP  ;D

My main point - and I guess it does need to be said again - is that the huge sell off to SP levels not seen for over a decade, isn't justified by looking at PE's or other fundamentals. Yes, an adjustment is required, and most businesses go through some periods of SP retrenchment, but the sell-off is way out of sync with what is happening. So, no problem with those that are scared off by the slide. I see an opportunity, but each to his own.

BTW, Buffet made his wealth by buying into companies that were undervalued. He wasn't deterred by market sentiment or even TA for that matter - it was all about value. I believe at current valuations he might well be interested in Spark. I'll ask.

Patience is required when these sort of adjustments happen. Will it slide further? Possibly. Will it eventually recover over a reasonably short time frame. Definitely.

My hold and buy more messages, hmm I wonder who else on here has been guilty of that, ill get the casting stones ready for the pure ones.

Quote from: LoungeLizard on Sep 19, 2024, 12:50 PMFor a non follower, you sure seem to reply to a lot of my posts, BP  ;D

...

OK - don't take that personally - but just for clarification ...

The people I tend to follow are posters I can learn from. Normally little reason to reply to them (except maybe to praise them for their wisdom or give them a like). Unlikely that this happened already too often in your case, did it?

If I reply to a post, than this is normally because I feel that I have something to add to the relevant subject, or that I feel that I need to provide balance to a quite one-sided or non-sensical post.

The latter is where many of your posts come into the game :) ; No need for you to feel followed - let me assure you, you are absolutely safe in that regard :P ;

Quote from: Breezy on Sep 19, 2024, 01:04 PMMy hold and buy more messages, hmm I wonder who else on here has been guilty of that, ill get the casting stones ready for the pure ones.

Nobody (well, clearly not me) said that you are unique in that regard, did I?

Quote from: BlackPeter on Sep 19, 2024, 05:58 PMOK - don't take that personally - but just for clarification ...

The people I tend to follow are posters I can learn from. Normally little reason to reply to them (except maybe to praise them for their wisdom or give them a like). Unlikely that this happened already too often in your case, did it?

If I reply to a post, than this is normally because I feel that I have something to add to the relevant subject, or that I feel that I need to provide balance to a quite one-sided or non-sensical post.

The latter is where many of your posts come into the game :) ; No need for you to feel followed - let me assure you, you are absolutely safe in that regard :P ;

Thanks for the re-assurance there, BP ;)

Quote from: LoungeLizard on Sep 19, 2024, 06:59 PMThanks for the re-assurance there, BP ;)

Thank goodness your not being stalked just observed and you don't make the cut for the follow list, gutting I know.

Quote from: Breezy on Sep 19, 2024, 07:48 PMThank goodness your not being stalked just observed and you don't make the cut for the follow list, gutting I know.

Hehe - I'll get over it ;)

Some say the recent SPK SP lows were due to possible DRP scheme manipulation as the DRP scheme's last 5 day consideration period was yesterday?

Anyways today will be interesting as the DRP consideration period is over, plus the USA interest rate news should give SPK a lift. GLH.

Quote from: Left Field on Sep 20, 2024, 08:27 AMSome say the recent SPK SP lows were due to possible DRP scheme manipulation as the DRP scheme's last 5 day consideration period was yesterday?

Anyways today will be interesting as the DRP consideration period is over, plus the USA interest rate news should give SPK a lift. GLH.

DRP scheme manipulations? Is it really necessary to give every senseless conspiracy theory oxygen?

On the other hand the US interest rate cuts might give the exchanges some temporary boost, though I don't see how it would impact on Spark more than it does on the rest of the crowd. Though admittedly, they have a lot of liabilities on their balance sheet, and highly indebted companies like Spark might get a bigger reward until the next crisis looms :) ;

Quote from: Left Field on Sep 20, 2024, 08:27 AMSome say the recent SPK SP lows were due to possible DRP scheme manipulation as the DRP scheme's last 5 day consideration period was yesterday?

Anyways today will be interesting as the DRP consideration period is over, plus the USA interest rate news should give SPK a lift. GLH.

That is right, the last day of the DRP consideration was on Wednesday 18/9/24 and DRP discount price of $3.246c. I noticed on close yesterday about 2 million were selling and sp up 3.5c. The DRPers don't need to sell any more, but also don't want sp to fall below DRP price. So you are right yesterday was an interesting day and today will be also interesting. Is GLH Good Looking Hair or Go Like Hell.

Quote from: seaweed on Sep 20, 2024, 09:03 AMThat is right, the last day of the DRP consideration was on Wednesday 18/9/24 and DRP discount price of $3.246c. I noticed on close yesterday about 2 million were selling and sp up 3.5c. The DRPers don't need to sell any more, but also don't want sp to fall below DRP price. So you are right yesterday was an interesting day and today will be also interesting. Is GLH Good Looking Hair or Go Like Hell.

Well that is my theory out the window sp went below $3.246c this afternoon LOL.

Quote from: seaweed on Sep 20, 2024, 04:06 PMWell that is my theory out the window sp went below $3.246c this afternoon LOL.

Cant stop those sharks from biting each other's tails off, upcoming interest rate cuts will help to lure the schools of reef fish back.

Quote from: Breezy on Sep 20, 2024, 04:29 PMCant stop those sharks from biting each other's tails off, upcoming interest rate cuts will help to lure the schools of reef fish back.

Yes, hard to maintain a rational mindset when the market is gripped by greed, and in the case of Spark, fear.
All one can do is hunker down and wait for the storm to pass  :o 

Quote from: seaweed on Sep 20, 2024, 04:06 PMWell that is my theory out the window sp went below $3.246c this afternoon LOL.

Maybe it was all about index rebalancing day??..... around 2 Mill shares through on close at $3.28

What that means for SPK next week who knows!

A lot of good stocks hammered on close today

I don't hold SPK .... just watching (and hopefully learning.)

Quote from: Left Field on Sep 20, 2024, 08:27 AMSome say the recent SPK SP lows were due to possible DRP scheme manipulation as the DRP scheme's last 5 day consideration period was yesterday?

Anyways today will be interesting as the DRP consideration period is over, plus the USA interest rate news should give SPK a lift. GLH.

I think there could be several factors at play, some of them not so much Spark specific as NZ specific. the sell down could be linked to the fact a number of other markets are having softer landings and therefore prospects are better, earnings forecasts look more robust etc. Some international investors of which Spark has quite a few will simply see better options elsewhere and see an opportunity cost in remaining invested in sometheing where the recovery timeframe is longer. NZ inc is sadly having a pretty hard landing and companies that operate almost entirely domestically and do not have a significant international focus are going to be operating in less than positive conditions for a while yet.

The recession is deep enough that a few rate cuts aren't necessarily going to revive things quickly. It was interesting to see how the 25 pt cut bolstered the listed property sector initially but now some of the gains have been given up again because commercial property needs more than lower interest costs it needs lots of healthy prospering tenants. I think some domestic stocks will have greater pricing power and be able to force big rises on a recession-ridden NZ but some sectors will be less able too. The upshot a lot of NZ stocks won't return to full health till the economy does so we could be in for a couple more bad earning seasons yet.

I guess timeframe, portfolio goals, whether imputation credits are of value to you etc. determine whether people choose to go long and buy in pessimistic times.

It has been a zero growth company for ten years. 

spk1.png

And yet, despite being a zero growth company its managed to borrow and spend an extra billion dollars over that period.  What did they spend it on?  What do they have to show for it?  Did they go to the same school of finance that Jacinda Ardern did?

spk2.png

What P/E should a zero growth company be trading on?  Probably lower than its current 20.  Maybe the 15 it used to trade on, in which case its got another 25% of the price to lose. 

spk3.png

Ben Graham believed zero growth companies should trade on a PE of 8.5

What PE for a company with a CAGR of 10% ? 

I had the sense this was a dividend yield trap and KW's post confirms the longer term trends so thanks for sharing that.

I predict it will be at least 2 years (minimum) before the SP resumes its former levels, assuming the SP recovers.  Such a SP recovery would have to be off the back of EPS growth and not just market enthusiasm.

Quote from: Basil on Sep 21, 2024, 03:00 PMBen Graham believed zero growth companies should trade on a PE of 8.5

What PE for a company with a CAGR of 10% ? 

The thing is - neither revenue (which would anyway be absolutely irrelevant for the Grahams formula) nor earnings did grow with anything like 10% - actually - earnings growth is lightly negative (i.e. earnings per share did shrink). Which means 8.5 is the best you should use as multiplier, rather less.

Yawn PE ratios, nice big divvy arrives in my bank account Oct 4th. Oh what a surprise that Telstra has a PE of 28, Yawn.

It's funny that Snoopy, on the other site, who is a number cruncher par excellence, basically concludes that Spark has been a steady-as-she-goes kind of company, for the best part of a decade, paying solid, reliable dividends and whose share price, the recent slide not included, has almost doubled over the past ten years. Add in dividends and Spark have comfortably beaten the NZX50 yearly average growth over this period.

What he also notes is that their revenue streams have moved constantly throughout this ten year period ie they have had to adapt to changing demands and technology. At the moment mobile revenue is under pressure but they are switching to data centres where they - and I - believe there is greater potential for growth. In other words, shifting sands, but fundamentally sound, as history shows.

What this tells me again, is that how the market interprets the fundamentals of a business matters is almost as much as the business itself. the same people that deride the numbers of Spark are supports of companies like HGH while others, like myself, look at their history and decision making and say "not on your life." Horses for courses.

PE's? Give me a break. If you use that as your main determinant then you will never invest in any of NZ"s biggest companies - FPH, MFT, AIA. Or rather, you won't, but your superannuation fund probably will. :)

 
 

Quote from: LoungeLizard on Sep 21, 2024, 07:26 PMIt's funny that Snoopy, on the other site, who is a number cruncher par excellence, basically concludes that Spark has been a steady-as-she-goes kind of company, for the best part of a decade, paying solid, reliable dividends and whose share price, the recent slide not included, has almost doubled over the past ten years. Add in dividends and Spark have comfortably beaten the NZX50 yearly average growth over this period.

What he also notes is that their revenue streams have moved constantly throughout this ten year period ie they have had to adapt to changing demands and technology. At the moment mobile revenue is under pressure but they are switching to data centres where they - and I - believe there is greater potential for growth. In other words, shifting sands, but fundamentally sound, as history shows.

What this tells me again, is that how the market interprets the fundamentals of a business matters is almost as much as the business itself. the same people that deride the numbers of Spark are supports of companies like HGH who others, like myself, look at their history and decision making and say "not on your life." Horses for courses.

PE's? Give me a break. If you use that as your main determinant then you will never invest in any of NZ"s biggest companies - FPH, MFT, AIA. Or rather, you won't, but your superannuation fund probably will. :)

 
 

The PE brigade must be bored but wait i have a project for them, I want them to explain to me in a convincing way the CNU PE and sp over the last 12 yrs, should keep them busy for a few weeks.
Haha yeah yet HGH and TRA were the biggest dog stocks on 4 legs a few yrs ago according to some of these SPK detractors.

Quote from: Breezy on Sep 21, 2024, 06:05 PMYawn PE ratios, nice big divvy arrives in my bank account Oct 4th. Oh what a surprise that Telstra has a PE of 28, Yawn.

Ah yes, Telstra.  Another zero growth company.  But I think you are mistaken with its P/E - its currently 16.  So I am not far off the mark.

Here is the Telstra historical P/E over the same time period.  Lets play spot the difference shall we?

TLS.png

Quote from: KW on Sep 22, 2024, 10:11 AMAh yes, Telstra.  Another zero growth company.  But I think you are mistaken with its P/E - its currently 16.  So I am not far off the mark.

Here is the Telstra historical P/E over the same time period.  Lets play spot the difference shall we?

TLS.png

 Telstra's PE is 16 and Sparks is about 19. Telstra SP is A$4 and Sparks is NZ $3.28. Which represents better value at this point?

Quote from: KW on Sep 22, 2024, 10:11 AMAh yes, Telstra.  Another zero growth company.  But I think you are mistaken with its P/E - its currently 16.  So I am not far off the mark.

Here is the Telstra historical P/E over the same time period.  Lets play spot the difference shall we?

TLS.png

Well on the Jarden Direct site it shows a PE of 28 for TLS and 19 for SPK so going off that.
Most people don't buy these stocks for growth but simply for consistent dividends and the big players buy it as a money parking spot and currency hedge.

Quote from: BlackPeter on Sep 21, 2024, 05:17 PMThe thing is - neither revenue (which would anyway be absolutely irrelevant for the Grahams formula) nor earnings did grow with anything like 10% - actually - earnings growth is lightly negative (i.e. earnings per share did shrink). Which means 8.5 is the best you should use as multiplier, rather less.

Perhaps I should not have been so cryptic in my post. What I was getting at is that,TRA, as an alternative high yield stock to Spark has been growing eps and dps at about 10% over the years whereas Spark is a no growth company. Despite this and strong prospects for that growth to continue it trades at half the PE.

It's not just the gross yield dividend hounds should focus on, it's whether it's likely to grow or shrink in the years ahead.

Spark's new data centre will just replace the earnings stream from their dieing copper network is how I see it.

Apart from that, my personal experience dealing with Spark when they withdrew copper around here, is I think their customer service is amongst the worst of any company I have ever experienced.

I don't buy stocks on PE's that make no common sense for the average growth experienced or expected In the years ahead.

Quote from: Basil on Sep 22, 2024, 11:45 AMPerhaps I should not have been so cryptic in my post. What I was getting at is that,TRA, as an alternative high yield stock to Spark has been growing eps and dps at about 10% over the years whereas Spark is a no growth company. Despite this and strong prospects for that growth to continue it trades at half the PE.

It's not just the gross yield dividend hounds should focus on, it's whether it's likely to grow or shrink in the years ahead.

Spark's new data centre will just replace the earnings stream from their dieing copper network is how I see it.

Apart from that, my personal experience dealing with Spark when they withdrew copper around here, is I think their customer service is amongst the worst of any company I have ever experienced.

I don't buy stocks on PE's that make no common sense for the average growth experienced or expected In the years ahead.

You don't like SPK and your not buying SPK yet you continue to spend a lot of time making negative comments on it, you know there are plenty of other dogs like HGH that require copious amounts of flea powder currently that you actually hold. TRA was close to being euthanased at one point but had its life spared yet that doesn't mean it will always be good stock going forward, the wheel in the sky keeps on turning.
Also TRA is more than likely getting to near the top of its positive cycle whereas SPK is heading to the bottom of its so which is the better buy going forward.

Any dividend hound worth his salt is going to run the ruler over all high yield opportunities. There is value in comparing them even if you can't understand why. 

Quote from: Basil on Sep 22, 2024, 12:49 PMAny dividend hound worth his salt is going to run the ruler over all high yield opportunities. There is value in comparing them even if you can't understand why. 

Comparing is one thing but pet beat up projects are another. HGH is currently carrying a few fleas but as a non holder its not my job to make it my next beat up and frankly I couldn't be bothered but I'm sure there would be plenty of objections if I were to.

Nothing wrong with good vigorous debate about the pro's and con's of various stocks mate.  I think you are too sensitive. 

Quote from: Basil on Sep 22, 2024, 04:42 PMNothing wrong with good vigorous debate about the pro's and con's of various stocks mate.  I think you are too sensitive. 

To be fair, there's a lot of that on both sides of the debate...

Quote from: Basil on Sep 22, 2024, 11:45 AMSpark's new data centre will just replace the earnings stream from their dieing copper network is how I see it.

Isn't it Chorus that owns, runs and maintains (not very well) the old copper network. Spark was having Chorus clip the ticket on the old copper network so were busy trying to get people onto their wireless network. Probably at a lower price so not much gained maybe.

Quote from: Apollo on Sep 23, 2024, 08:49 AMIsn't it Chorus that owns, runs and maintains (not very well) the old copper network. Spark was having Chorus clip the ticket on the old copper network so were busy trying to get people onto their wireless network. Probably at a lower price so not much gained maybe.

Correct and shows some peoples lack of understanding of the company basics. Wireless available over a larger and more remote areas than the old copper network though.

KW's post #158 is very enlightening if you think buying at an 18 P/E is good value unless you think SPK is going to grow earnings a lot over the next few years. Predicting the future is impossible but generally the past can give us an idea what to expect.

Quote from: Apollo on Sep 23, 2024, 10:31 AMKW's post #158 is very enlightening if you think buying at an 18 P/E is good value unless you think SPK is going to grow earnings a lot over the next few years. Predicting the future is impossible but generally the past can give us an idea what to expect.

Not enlightening for those of us that have been dealing with this stock for over a decade and yep the past consistent dividend payments over that time can give you an idea what to expect. Overseas Big boys selling down just like when they sold CNU down to a very deep value of $1.40. This sell down is very much a reflection of the crap state the NZ economy is really in currently.

There's a report apparently of Spark winning a $100m contract with Transpower. But the sell down continues regardless....

Quote from: LoungeLizard on Sep 23, 2024, 04:44 PMThere's a report apparently of Spark winning a $100m contract with Transpower. But the sell down continues regardless....

I don't think these big players care about anything once they start their selldown, it just continues until they hit their numbers. One thing for sure is they will be losing big dollars.

Quote from: LoungeLizard on Sep 23, 2024, 04:44 PMThere's a report apparently of Spark winning a $100m contract with Transpower. But the sell down continues regardless....

Ah well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

Quote from: BlackPeter on Sep 24, 2024, 09:39 AMAh well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

Well I'm very sure that those that ignored the market when XRO fell from $45 to $12 and then back up to well  over $100 are still holding up their middle fingers whilst lying on a nice beach somewhere. Those that did the same when CNU dropped from $4 to $1.40 and now near $9 would be doing the same and how about GTX $5.85 to $1.50 now over $10, how many examples would you like or perhaps you don't want to hear.

Quote from: BlackPeter on Sep 24, 2024, 09:39 AMAh well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

Cryptocurrencies now? Left the 19th century railroad analogy behind?

Falling knives I get. No-one can predict the bottom of a market that has moved into overdrive on the overselling. I'm happy to pick up at lower values, but will it go lower still? Maybe. Maybe not.

People have different investment strategies, and that's fine. I prefer large, essential, infrastructure companies that provide good long term growth (SPK doubled in value in ten years, whilst paying a solid dividend) and the occasional long-shot punt (PEB). That approach has done me just fine over the years - in the case of IFT (my biggest holding) more than just fine.

One of the advantages of this low-risk, steady as she goes approach, is not only that it has beaten the NZX50 and managed funds returns, but I don't have to sweat over every little announcement and dip. I even trade in these stocks sometimes, as I know that if the trade goes south, I'm still left with a good long-term hold.

Anyway, let's see where SPK is in 6-12 months. I'll wager it will reward those who got in at these sort of levels and those who missed out will be in the park shouting at the pigeons. ;)   

I am invested in SPK and GNE as part of my dividend portfolio.
I also recently added to my SPK and GNE holdings to get the upcoming  divies.

Quote from: lorraina on Sep 24, 2024, 11:33 AMI am invested in SPK and GNE as part of my dividend portfolio.
I also recently added to my SPK and GNE holdings to get the upcoming  divies.

Yes, GNE I also hold and have increased. It's another stock where those who invest with a different strategy, just don't "get." A PE of 18- (ooh-er). Re-capitalisation to pivot to emerging technologies (careful now!). A temporary cut to dividends to execute long-term strategy (down with this sort of thing!). Ah-well, each to their own  ;D
 

Gosh this stock has had a beating. Not surprised with worst to come I reckon. Young ones using messenger and apps for calls and messages. Lots of competition with number portability making it easy to switch.

FB say today

The stock has fallen by ~-40% in 2024. We expect continued weak performance from here, and downgrade SPK to UNDERPERFORM $2.90 with divi to face cuts.

Quote from: Shareguy on Sep 25, 2024, 11:13 AMGosh this stock has had a beating. Not surprised with worst to come I reckon. Young ones using messenger and apps for calls and messages. Lots of competition with number portability making it easy to switch.

FB say today

The stock has fallen by ~-40% in 2024. We expect continued weak performance from here, and downgrade SPK to UNDERPERFORM $2.90 with divi to face cuts.

Is that 2.90 kiwi or Aussi SPK ASX is at 2.90 now.

Its Forsyth Barr mate so all their price targets are in $N.Z. 

Quote from: seaweed on Sep 25, 2024, 12:03 PMIs that 2.90 kiwi or Aussi SPK ASX is at 2.90 now.

Don't think this matters. Remember - analysts are always optimists :) ;

Interesting - the next down-leg is looming:

https://businessdesk.co.nz/article/markets/sparks-msci-world-index-slot-in-doubt-as-share-price-falls

(probably pay-walled, but the title gives it away ...)

Quote from: BlackPeter on Sep 25, 2024, 03:13 PMDon't think this matters. Remember - analysts are always optimists :) ;

Morningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

Quote from: Apollo on Sep 26, 2024, 11:06 AMMorningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

Yes, you're right there -everyone can find an analyst to support their position. Are Morningstar likely to be more impartial than NZ institutions and ratings agencies who are regularly involved in the investement in /  business affairs and placements of the very businesses they are supposed to be "objectively" analysing?  ::)

https://www.nzherald.co.nz/business/finance-director-quits-at-under-pressure-spark/YJZRDGNH6NBN7LPSOPUYXBN4P4/
Paywalled but well worth the very small cost of the weekly subscription.

Quote from: Apollo on Sep 26, 2024, 11:06 AMMorningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

Good question. I think I said something along the lines "if we allow for a PE of 10, they would be worth something around $2.50".

The thing is - I try to identify and buy stocks which are undervalued, and I wouldn't call Spark at $2.50 "undervalued".

Maybe I would be interested with a one handle (which would be a PE<= 8 ), but I assume that if it goes down that far there might be other news still to consider.

Bare any other news I suspect it will bottom somewhere around the mid $2's - and driven by hype, sentiment and plainly physics go up again a bit ... though I don't see it returning to its former glory anytime soon.

It probably will just stay one of these stocks I continue to watch (one can learn so much from fascinating human behaviour, though watching Spark is for long periods of time just like watching paint to dry or watching cricket :) ).

Maybe Spark and me are just not made for each other :) - I don't even like to buy services from them, why should I want to own the shares?; Does this make me a stock - stalker?

Ah yes - and analyst estimates (even from more reputable sources like Morning Star) might be interesting (because they describe one possible working assumption and as well because they are input into the price finding mechanism for the market), but they are not statistically correlated with the future value of a stock. I did some analysis on this subject years ago on the other forum ... correlating analyst consensus and future stock values just gives you white noise. That's the thing with the future - nobody can predict it.

Quote from: BlackPeter on Sep 26, 2024, 12:56 PMThat's the thing with the future - nobody can predict it.

I knew you were going to say that...

Craig's view

This was a weak result. EBITDAI was $1163m vs guidance issued in May of $1170-1210m. We had forecast EBITDAI of $1180m (core of $1145m plus $35m of asset sales). This result comprised core EBITDAI of $1061m plus asset sale gains of $102m, so the core result was down 8.5% on pcp and well below CIPe $1145m.


SPK will pay a fully imputed final dividend of 14.0c, in line with guidance and taking the total for the year to 27.5c. FCF was $330m and well below the c$500m needed to cover the dividends. The DRP has been reinstated, which based on historical take-up could fund around $100m of the gap. It is also hard to not be critical of the company's capital management when less than a year ago they were buying back stock at over $5 per share and now are planning to issue new shares in the DRP at a price more than 20% lower.

Quote from: Shareguy on Sep 28, 2024, 06:25 AMCraig's view

This was a weak result. EBITDAI was $1163m vs guidance issued in May of $1170-1210m. We had forecast EBITDAI of $1180m (core of $1145m plus $35m of asset sales). This result comprised core EBITDAI of $1061m plus asset sale gains of $102m, so the core result was down 8.5% on pcp and well below CIPe $1145m.


SPK will pay a fully imputed final dividend of 14.0c, in line with guidance and taking the total for the year to 27.5c. FCF was $330m and well below the c$500m needed to cover the dividends. The DRP has been reinstated, which based on historical take-up could fund around $100m of the gap. It is also hard to not be critical of the company's capital management when less than a year ago they were buying back stock at over $5 per share and now are planning to issue new shares in the DRP at a price more than 20% lower.

All true but still doesn't explain a 40% drop in SP. You have to be a FBU or WHS to adequately explain such a fall. Clearly oversold but the real question that Craig's etc don't answer is why.   

I have been looking into Spark this evening trying to find a decent dividend yielding stock.  Apologies for the long post.

TLDR: I won't be putting any $$ into SPK until I see an improvement in the financials.  EPS looks soggy, dividends look to be unsustainable, and debts have blown out over the past 10 years for no incremental benefit.

Earnings
Earnings per share is summarised per the 10 year graph below.  From 2015-2022 Annual EPS has hovered around 20-23c until 2023 which jumped to 62c* mostly due to the gain on sale of Connexa, and 2024 EPS dropped to 17c.  For those who look at P/E ratios, the fall in 2024 earnings may explain the recent SP fall given FY24 EPS was 23% below the prior 9 year average of 22c (after normalising the FY23 result).  But a share price drop of 36% in the past 12 months feels like an over reaction.

SPK EPS 2024 - Copy.JPG

Sales per share has a 0.9% CAGR and NPAT as a percentage of sales has a CAGR of -2.6% per annum over 10 years.  Issued shares have dropped by 0.9% over 10 years (from 1,830m to 1,814m) after deducting 60m shares purchased under the buyback scheme in 2023 and 2024.

Putting all that together, EPS has a negative CAGR of -1.6% per annum over the past 10 years.  This will flip to being positive if EPS in 2025 exceeds 20c.  Let's say SPK can get back to 22c per share, would it qualify as a 'no growth' company?

*Looking closer at the high EPS of 62c in 2023: this included 32c of a tax free gain on the sale of Connexa, which leaves 30c which is out of whack with the prior years' range of 20-23c.  There was also an adjustment to deferred tax assets of $126m on the new Connexa leases (7c per share) and other tax adjustments of $42m (2c per share) which leaves earnings of around 21c per share. {NB: late correction to the per share values}

Dividends
Questions persist if the SPK dividend is sustainable.  The following graph shows EPS versus DPS over the past 10 years.  In 8 of the last 10 years, the cash dividend per share (being the nett payment ignoring imputation credits) has exceeded earnings per share.  For those who look at dividend payout sustainability and/or rely on dividends for income, this might also explain the recent drop in SP.

SPK Divs 2024 - Copy.JPG

Average payout ratio is 109% of EPS for the past 10 years.  Note this increases to 115% when you normalise the 2023 fiscal year to 26c EPS.  Is this currently a dividend yield trap with annual cash dividends of 27c versus a SP of $3.09?  Time will tell.

[EDIT : eagle eyed investors may notice a disconnect between declared dividends and cash dividends which I use.  My models are built showing returns to investors hence the reason I use cash dividends paid during a fiscal year, not dividends declared that pertain to a fiscal year.  These graphs are a useful subset of the wider return calculations I use.]

Debts
We can look at the SPK history of debt raising to see if that has helped SPK with its growth ambitions, and whether we expect that to increase earnings in future.  The graph below has interest bearing debts versus equity over the past 10 years.

SPK Debts 2024 - Copy.JPG

The change in debt versus equity over the past 10 years says to me this is a deliberate tactic by SPK.  Why would they do this?  Debts have increased from $692m to $1,619m over the past 10 years, while equity has fallen from $1,778m to $1,590m over the same time period.

This says 4 things to me:
 1. dividends that exceed earnings are a form of returning capital to investors as evidenced by the falling equity balance
 2. SPK are increasing borrowings to pay dividends
 3. despite an additional $927m in interest bearing debts, there has been no noticeable increase in EPS per the first graph
 4. SPK has spent the $893m proceeds received on the sale of Connexa; debts in 2024 exceed 2022 debt levels prior to the sale of Connexa.  $305m was spent on share buybacks, with the balance likely spent on capex given the cash balance has hardly moved from 2022 to 2024.

Connexa
On the sale of Connexa refer AR23 p95: Spark banked $893m on the sale, entered into new leases of $488m, and after deducting assets foregone etc etc, SPK banked a gain on sale of $583m.  The new leases will add {roughly ($488m-$51m**)/15 years) less tax of 28%} ~$21m of higher annual lease costs to SPK, which is roughly 6-7% of FY24 NPAT before making any adjustments for asset depreciation.  Note the mobile tower sites had a small book value so the effect of less depreciation will be minimal.

**Note the ground leases for the mobile sites were novated to Connexa reducing lease liabilities by $51m hence the -$51m adjustment noted.

We won't talk about the (IMO) dodgy tax treatment on this transaction.

Great piece of work there Ferg - thanks for all the effort put in.

Can't dispute your figures and obviously there's some pause for thought from investors going on based on what was an underwhelming report and concerns about the dividend going forward. However...

As weak as the result was, it doesn't validate the market response. We're approaching $3 per share, a 40% drop. Something doesn't add up there...

Guidance next year is projecting a return to growth, reduced cap spend, $80m in labour cost/opex reductions and - wouldn't you know it - the same dividend as last year, albeit 75% imputed. Guidance can be changed or not met, but it doesn't sound like a sinking ship to me.

I'm max-ed out on SPK shares, so nothing to do now but wait, watch and hopefully at some point, cheer. ;D

Thanks LL.

I have been musing over this today and I agree it sounds like the SP drop is overdone.  I mentioned in my post the drop in EPS and questions around the dividend as possible reasons for the SP drop but that doesn't explain all of it.  IMO that 3rd chart paints a picture that would disappoint a number of investors - I know I would be mightily annoyed seeing that graph as an investor after SPK banked $893m for Connexa.

Imagine you come out of the back of FY23 with record EPS, debts down a whopping amount which puts them back at levels from ~5 years prior, and all is looking rosy after the sale of Connexa.  Things are looking up right?  Then FY24 rolls around and debts are at an all time high and EPS a 10 year low.  I would be incredibly annoyed if I were an investor at the wasted opportunity by SPK.  Yes they are likely investing in the future of data centres etc but it takes time to make meaningful contributions to earnings with capex.  For me the proof is in the pudding of prior results that taking on debt (to fund dividends + capex) has not made a significant change to EPS in the last 10 years.

EDIT: and in light of the CFO departure, maybe he was pushed / fell on his sword over the share buy back, which in hindsight was an absolute fizzer and a waste of $305m.

My prediction (did you predict I would say that?  ;D  ) is the SP will be depressed for a minimum of 12 months, more likely 2 years before SPK delivers and the professional investors re-rate based on evidence.  We minnows are merely observers to the actions of the whales.

GLTAH

Quote from: Ferg on Sep 30, 2024, 04:50 PMEDIT: and in light of the CFO departure, maybe he was pushed / fell on his sword over the share buy back, which in hindsight was an absolute fizzer and a waste of $305m.

Looking at this further.....

Spend $305m buying 60m shares saves SPK ~$16m p.a. in cash dividends
versus
Spend $305m repaying debt at 7% saves SPK ~$21m in interest less tax of 28% is ~$15m cash saving p.a.

The interest savings will reduce as interest rates fall, and the dividend savings will increase as dividends increase over time.

Mathematically it makes sense to buy back the shares in an environment where interest rates are falling.  But one of these things is not like the other.....

Imagine a scenario where you repay $305m of debt and reduced the dividend for say 2-3 years.  Assuming half dividends for 3 years saves circa $735m.  Boom debts are down by $1b + change over 3 years.  Take the pain on the SP but get the debts down.  De-risk the business and leave it in better shape than you found it.

But no, do Management get incentives for things like return on equity?  Hence the shrinking equity and increasing debts...

Quote from: Ferg on Sep 30, 2024, 04:50 PMI have been musing over this today and I agree it sounds like the SP drop is overdone.

Awesome work Ferg, thank you.  You and KW have made the case very comprehensively this is a no growth company.  Sure, there might be some growth in the future with the data center.  Only time will tell with the current cost of capital if this is eps accretive and when.

Even with equity risk premiums reducing considerably since Ben Graham's day when he argued a no growth company is worth no more than a PE of 8.5 when the risk free rate is 4.0%, I find it hard to get enthusiastic about paying any more than a 10 handle for a no growth company with only a modest prospect of some modest possible eps growth in the years ahead. 10 times say average eps of 22 cps = $2.20.

Oversold or reality starting to bite?  You folks be the judge, but I'm not rushing in anytime soon.

Thanks Basil

Quote from: Basil on Sep 30, 2024, 06:45 PMOversold or reality starting to bite?  You folks be the judge, but I'm not rushing in anytime soon.

Same.  This is both oversold and reality, but with a huge caveat.  It may be considered oversold based on knowledge to hand today, but new knowledge may result in more reality continuing to bite.  Speaking of which, someone very generously shared some research with me today that predicted cuts to the SPK dividend in FY26 and commentary around data centre earnings.  That other dog championing SPK needs to zoom out for a bit given long term investments require a long term view.

Quote from: LoungeLizard on Sep 30, 2024, 03:34 PMGreat piece of work there Ferg - thanks for all the effort put in.

Can't dispute your figures and obviously there's some pause for thought from investors going on based on what was an underwhelming report and concerns about the dividend going forward. However...

As weak as the result was, it doesn't validate the market response. We're approaching $3 per share, a 40% drop. Something doesn't add up there...

Guidance next year is projecting a return to growth, reduced cap spend, $80m in labour cost/opex reductions and - wouldn't you know it - the same dividend as last year, albeit 75% imputed. Guidance can be changed or not met, but it doesn't sound like a sinking ship to me.

I'm max-ed out on SPK shares, so nothing to do now but wait, watch and hopefully at some point, cheer. ;D

I guess one could argue the market used to be crazy before and just came to its senses.

But no matter whether the market overvalued Spark in the past and is only coming now to its senses (as I think), or whether the market used to value it correctly in the past and is undervaluing it now (as you seem to think) ... remember:

The market can stay irrational longer than you can stay solvent - i.e. always dangerous to wait for the market to correct its (perceived) "mis"-valuations, and if you just look at the fundamentals and the future earnings potential, than Spark looks still dear today.

Ah yes, and hope is not a good investment strategy, but I am sure you knew that :) ;
 

Quote from: BlackPeter on Oct 01, 2024, 09:05 AMAh yes, and hope is not a good investment strategy, but I am sure you knew that :) ;
 

In the universe where nobody can predict the future hope is the only way forward

In the last decade the low point is $2.63 in May 2015.  Holders will be hoping it doesn't test or really hoping it doesn't break down below that level.

The SPK pivot to data centres isnt going to happen - nor will any NZ company looking to build data centres in this country.  Our electricity prices are simply too high.  And the pricing model for data centres is moving to power consumption, not square footage of space (much like how telcos moved from charging by call minutes and texts to charging for data).  Not to mention that NZ simply does not produce enough electricity.

https://www.nzherald.co.nz/nz/politics/what-went-wrong-in-the-electricity-market-and-why-it-will-get-worse-before-it-gets-better/EXTDX7DD6JGNJJFR7UEATLLFRA/

Quote from: KW on Oct 02, 2024, 11:11 AMThe SPK pivot to data centres isnt going to happen - nor will any NZ company looking to build data centres in this country.  Our electricity prices are simply too high.  And the pricing model for data centres is moving to power consumption, not square footage of space (much like how telcos moved from charging by call minutes and texts to charging for data).  Not to mention that NZ simply does not produce enough electricity.

https://www.nzherald.co.nz/nz/politics/what-went-wrong-in-the-electricity-market-and-why-it-will-get-worse-before-it-gets-better/EXTDX7DD6JGNJJFR7UEATLLFRA/

More 'bendz in ze rails' for ze Spark datacentre express?   Just as vell Infratil's CDC eez not zimilarly effected!  Phew!

RB

Quote from: KW on Oct 02, 2024, 11:11 AMThe SPK pivot to data centres isnt going to happen - nor will any NZ company looking to build data centres in this country. 

"Pivot to", "isn't going to happen"? Spark already has 16 data centre sites, they've been in the market for many years, and are aggressively growing and expanding that capability. They have all sorts of innovative partnerships around access to energy.

Not to mention, our data centers are not necessarily competing with international centers. I know that Christchurch hospital uses a spark data center and I doubt if they would be happy to outsource to another country for privacy and speed reasons. Similarly, we are waiting to outsource a piece of software to the cloud until there is sufficient capacity in New Zealand - for this use, an Australian center would introduce too much lag.

Quote from: Buzz on Oct 02, 2024, 12:39 PM"Pivot to", "isn't going to happen"? Spark already has 16 data centre sites, they've been in the market for many years, and are aggressively growing and expanding that capability. They have all sorts of innovative partnerships around access to energy.

And they are all going to be subject to the same price pressures that is currently facing the likes of the pulp mills.  Who is going to be paying for the power?  Not the customer, unless the customer is forced by law to use an onshore data centre.  

Spark recently started price gouging people who wanted to retain their xtra email accounts. Price went from $5.95 to $9.95  per month, nearly doubled in one foul move.

Quote from: Basil on Oct 02, 2024, 03:57 PMSpark recently started price gouging people who wanted to retain their xtra email accounts. Price went from $5.95 to $9.95  per month, nearly doubled in one foul move.

If you're not paying for the product, you are the product.

An article on gmail and confidentiality.

https://www.theguardian.com/technology/2021/may/09/how-private-is-your-gmail-and-should-you-switch

There is a reason Google and Facebook dominate the online world of advertising.

$9.95 a month is great value.
Crikey I paid $40 the other day for a hair cut,and I now have half the hair I had when it cost $15..................lol.

This article I saw today might explain a few things.  Gosh...90 million shares to be sold if Spark exits the MSCI index.  That's a really serious truckload of shares !!

QuoteLeading New Zealand broking houses are telling clients that between 34 million and 40m Spark shares are tied up in what market observers believe is a short-selling campaign. Spark shares have plummeted in six weeks to trade as low as $3.01 early this week, their lowest point in more than nine years. Spark shares last traded below $3.03 in August 2015 and were last below $2 a decade ago, in October 2014. The fall has been accompanied by unusually heavy daily traded volumes. Estimates In a confidential note late last week, which BusinessDesk has sighted, Jarden told high net worth clients that as of last Friday "meeting the short position in SPK (Spark) currently amounts to around 40m shares". Forsyth Barr estimated the short position in Spark shares to be about 34m shares late last week. The Australian Securities and Investment Commission, which maintains a register of stocks that are being short-sold, has been consistently recording more than 6m Spark shares in recent weeks. This appears to be about twice as many of the dual-listed Spark's shares as have commonly been disclosed on the Australian Securities Exchange register, but does not include shares that may have been short-sold on the NZ Exchange (NZX). The NZX maintains no short-selling register, making discovery of short-selling activity almost impossible for any market participant not directly involved in the activity. NZ Regco, which monitors NZX share trading, has so far made only one boilerplate comment in response to media inquiries about the apparent short selling of one of the local exchange's most liquid and widely held stocks. That comment, made last week, said Regco monitors all stocks for unusual trading activity and would continue to "monitor this stock" accordingly. Index changes Jarden told clients that Spark had dropped out of the FTSE All World Index and would be expected to leave the MSCI index in coming weeks, which would inevitably cause selling in Spark shares. "The pricing for the [MSCI] change will be determined over the last 10 days of October, with the change being implemented on the last Friday of November," wrote Jarden director Jeremy Ashworth. "This is expected to result in the sale of 90m SPK shares. As noted in this morning's meeting, the short position in SPK currently amounts to around 40m shares." How it works Short selling ahead of an expected fall in a stock's share price allows traders to profit from the falling price in the same way that most investors expect to benefit from a rising share price. The practice is entirely legitimate, but not visible to most investors or market watchdogs in NZ, where short selling has tended to be uncommon. To short-sell a stock, traders will often "borrow" stock from an existing shareholder, usually an institutional investor or broking house, for a fee, then take the difference between the higher and the lower price when it occurs in the future. As a trading strategy, short selling comes with the risk that the anticipated fall does not occur, but the momentum has been all one way on Spark since shortly after its profit announcement on Aug 16. The company announced a weaker-than-expected profit and a dividend increase, despite dividends outstripping free cash flows for some years. A "model portfolio change instigated by one of our competitors" was also a source of selling pressure on Spark, Jarden noted.
.

Quote from: Basil on Oct 02, 2024, 05:39 PMThis article I saw today might explain a few things.  Gosh...90 million shares to be sold if Spark exits the MSCI index.  That's a really serious truckload of shares !!

So it turns out that there was more to the overselling than met the eye. Not a conspiracy theory after all.
All the more reason, imo, not to sell, and in fact buying at these levels or lower, the possible drop from the MSCI index notwithstanding, is still a good long term strategy. If the downtrend is an artificial, manipulated event, then is this a case where buying in a downtrend is actually the smart thing to do??? ::)

Well, yes, no, maybe.  The problem is that I believe the potential index exit isn't until sometime in November, someone else may know the exact date so there's plenty of opportunity for more short selling to exacerbate the downtrend. Each to their own, I'd rather buy companies with proven growth and genuinely plausible prospects for growth to be ongoing on much cheaper metrics than this company which all it has proven it can do so far, is not grow.  It's not just the dividend yield, it's the direction of travel of the level of dividends one needs to focus on just as much as the yield itself.  Maybe they can pay 20 cps on a sustainable basis going forward in the medium term, fully imputed,, that's 27.77 cps gross.  That in theory might support a company in the late $2 range, maybe even around the current price if the reserve bank drops 50 bps next week so maybe we are close to the bottom, who knows, but I remain deeply skeptical regarding any realistic prospect for earnings growth in the years ahead.

Quote from: LoungeLizard on Oct 03, 2024, 10:00 AMSo it turns out that there was more to the overselling than met the eye. Not a conspiracy theory after all.
All the more reason, imo, not to sell, and in fact buying at these levels or lower, the possible drop from the MSCI index notwithstanding, is still a good long term strategy. If the downtrend is an artificial, manipulated event, then is this a case where buying in a downtrend is actually the smart thing to do??? ::)

What was first - the chicken or the egg?

Clearly - there must be a reason for the Spark SP tanking. That Spark is now removed from various indices is not the  cause, but the consequence of its SP tanking.

The 100m $ question is - what is the root cause?

I recon you don't need to look further than Sparks economical outlook. How much is a share worth which earns in average 25 cents per year and shows no sign of any sustainable growth?

If you think that's more than $2,50 - then absolutely, go for it and fill your boots. Better though, to do this in silence. The less you ramp, the more cheap shares are available for you.

Go for it!

Quote from: BlackPeter on Oct 03, 2024, 10:15 AMthe more cheap shares are available for you.

I thought I'd learned that lesson already lol, but I wish I'd kept my mouth shut on the HLG thread.  I'd love a few more at $6.30 but don't like my chances now

OK - just lets have some TA fun:

Anybody noticed that these down slides often seem to come in waves of three - with the middle down wave being the largest?

The first slide started in January around $5.40.
The second slide started in August around $4.40.
Now we are at $3.

If this is the end of the second slide (which needs confirmation), than the third and last slide might go down to $2.

Not far away from my 1 handle :) - spooky;

Wherever it ends, it is probably fair enough to assume that we will have afterwards a slight recovery (particularly with interest rates dropping). Not enough in my view for a two bagger (no matter, where the bottom will be), but hey - small animals produce manure as well ...

Sparkdown - Copy.JPG

Discl: Nobody can predict the future ... including me.

Quote from: Basil on Oct 03, 2024, 10:33 AMI thought I'd learned that lesson already lol, but I wish I'd kept my mouth shut on the HLG thread.  I'd love a few more at $6.30 but don't like my chances now

To be fair - Sparks liquidity looks somehow favourable compared to HLG's - however sadly, this is not what I could say about the respective financial outlooks of these two companies.

comparing stock water with Champaign?

If you agree that the extent of the slide has more to do with what now is an acknowledged short selling campaign, then conventional TA analysis isn't really that relevant.
 
At current SP levels coupled with a still healthy dividend (27.5cps) Spark is a value share, regardless of whether you think there will be a return to growth next year (Spark are forecasting there will be). Capital gain + dividend over the next 12 months looks attractive to my eyes.   

Quote from: LoungeLizard on Oct 03, 2024, 11:27 AMIf you agree that the extent of the slide has more to do with what now is an acknowledged short selling campaign, then conventional TA analysis isn't really that relevant.

How so? That would make most TA redundant. All shares can and are shorted.

Quote from: entrep on Oct 03, 2024, 11:35 AMHow so? That would make most TA redundant. All shares can and are shorted.

Not on the scale we've seen with Spark. I can't remember anything done to this scale on a blue chip company before.

Large scale shorting really distorts market pricing and by its nature it's a temporary distortion which makes it impossible to project any kind of "normal" trend.

Many assets are "shorted" all the time, not just NZX shares.

US shares, FX, gold, crypto, etc, etc. Futures and spot. On all kinds of scales.

Shorting does not make TA redundant. Otherwise all TA would be redundant.

It's the market.

Quote from: entrep on Oct 03, 2024, 11:46 AMMany assets are "shorted" all the time, not just NZX shares.

US shares, FX, gold, crypto, etc, etc. Futures and spot. On all kinds of scales.

Shorting does not make TA redundant. Otherwise all TA would be redundant.

It's the market.

Yeap I agree, it is what it is.  I'd wager HGH came in for heavy shorting just before the capital raise at $1.  Sometimes if you like a stock's prospects going forward you have to swallow a dead rat, a huge one can take quite some time to digest, ask me how I know lol.  I've had my fill of dead rats this year.

Nope - still disagree. NZX is a small exchange and much easier to distort than the US exchange and certainly different to the global pricing of the FX, gold, crypto etc.
If you agree that the point of shorting is to artificially lower the market price, then any kind of predictive tool that requires the market to be behaving "normally" in terms of the buying/selling impulse, is going to be less relevant.

Quote from: LoungeLizard on Oct 03, 2024, 11:54 AMNope - still disagree. NZX is a small exchange and much easier to distort than the US exchange and certainly different to the global pricing of the FX, gold, crypto etc.

I disagree. There are some really heavy hitters (whales), that operate massive short campaigns on the US markets.

Quote from: Basil on Oct 03, 2024, 11:55 AMI disagree. There are some really heavy hitters (whales), that operate massive short campaigns on the US markets.

Let me know which top ten stock in the US has had a 40% drop in its SP over a matter of a few weeks, as a result of short-selling.

Quote from: LoungeLizard on Oct 03, 2024, 11:27 AMIf you agree that the extent of the slide has more to do with what now is an acknowledged short selling campaign, then conventional TA analysis isn't really that relevant.

This is a big IF ... and no, I don't. The share price is set by the market. And, sure - Mr. Market gets it sometimes right and frequently wrong ... however - whether individual market participants are long or short does only reflect on their individual believe about the future of a stock, it doesn't change the stock price.

Obviously - if many people think that the price will go down (and subsequently put their money where their mouth is - i..e. short), than maybe, just maybe - these people have a point?

Quote from: LoungeLizard on Oct 03, 2024, 11:27 AMAt current SP levels coupled with a still healthy dividend (27.5cps) Spark is a value share, regardless of whether you think there will be a return to growth next year (Spark are forecasting there will be). Capital gain + dividend over the next 12 months looks attractive to my eyes. 

You call a dividend paid out of loans "healthy"? Spark pays more dividends than they generate - and their debt load looks closer to the balance sheet of a bank than of a healthy utility. 2/3rd's of their balance sheet are liabilities, and their NTA is negligible. Healthy? Really?

Doesnt really matter if it is shorts that drove the price down, it still wont make the share price go back up afterwards.  The shorts will be sitting in the wings ready to absorb the stock directly from the index funds to close their positions out.  Where are the new buyers going to come from to push the price back up again?

The SPK share price has been falling since FEBRUARY.  Do you really think 8 months of continual selling is just shorts?  The entire reason SPK is being removed from the MSCI is because its share price has fallen so much - so the ship was already on the rocks and breaking up long before the shorts arrived to scavenge the wreckage.

Quote from: KW on Oct 03, 2024, 12:57 PMDoesnt really matter if it is shorts that drove the price down, it still wont make the share price go back up afterwards.  The shorts will be sitting in the wings ready to absorb the stock directly from the index funds to close their positions out.  Where are the new buyers going to come from to push the price back up again?

After the shorting event is over, buyers (including the shorters) buy in. That's how the money is made after all. Once demand/supply normalises, normal pricing resumes. The time frame for that is debatable but normalisation will happen pretty rapidly when it occurs.

Quote from: LoungeLizard on Oct 03, 2024, 11:54 AMNope - still disagree. NZX is a small exchange and much easier to distort than the US exchange and certainly different to the global pricing of the FX, gold, crypto etc.
If you agree that the point of shorting is to artificially lower the market price, then any kind of predictive tool that requires the market to be behaving "normally" in terms of the buying/selling impulse, is going to be less relevant.

The point of shorting is to make money with a stock where you assume that the stock price will drop. Same as holding a stock and making money with the sum of dividends and capital gains if you assume the SP will rise (or at least hang around).

Neither holding long nor holding shorts changes the share price ... only hype (i.e peoples expectations about the future) does.

I think it's pretty well understood - or at least I thought it was - that short sellers drive the price lower by increased selling if the demand stays similar. That's what the huge sell off in SPK has done - driven the SP to artificially low levels.

Fairly normal trading levels today - and the SP goes up 3% ;)

Quote from: LoungeLizard on Oct 03, 2024, 01:19 PMFairly normal trading levels today - and the SP goes up 3% ;)

Exactly what you would expect at the beginning of the next down leg ... otherwise it would be just a continuation of the old down leg :P ;

Quote from: BlackPeter on Oct 03, 2024, 04:59 PMExactly what you would expect at the beginning of the next down leg ... otherwise it would be just a continuation of the old down leg :P ;

Yeah,but no. 3.6m shares traded - still way above historical levels.
Is todays lift the beginning of the next downtrend or are the shorters, having been outed, already closing their positions. Another week of trading will probably tell the story.

Avg tp price of $4.37 over 9 analysts with an outperform rating, bang on in my opinion.

FB latest underperform IE sell $2.90

Quote from: Shareguy on Oct 09, 2024, 11:24 AMFB latest underperform IE sell $2.90

They are one of the nine but eight above them and I don't rate them very highly anyway going by past experience. You know the old rule if you get a whole stack of quotes for some work then chuck out the bottom and top one to start with.

Quote from: Shareguy on Oct 09, 2024, 11:24 AMFB latest underperform IE sell $2.90

Don't believe them - analysts are always too optimistic :) ;

https://www.nzherald.co.nz/business/whats-eating-spark-three-pain-points-and-a-three-step-comeback-plan/CBBYOOBAUZCI5ONDHZRNLHBBQY/

Quote from: Basil on Oct 14, 2024, 07:35 PMhttps://www.nzherald.co.nz/business/whats-eating-spark-three-pain-points-and-a-three-step-comeback-plan/CBBYOOBAUZCI5ONDHZRNLHBBQY/

https://www.nzherald.co.nz/business/markets-with-madison/have-telcos-lost-their-spark-not-a-revenue-growth-story-analyst/MDO6HB3BCZDUNFZD4X6PYS4Z4Y/

But hey - nothing one couldn't have read already months ago in this thread. Its just that the Herald now writes about it to fund its paywall.

Wow - $3 resistance level broken  and we're in free fall again. $2.93! I may be the only retail buyer on the exchange who looks at the 13% return and thinks...hmmm...

Quote from: LoungeLizard on Oct 16, 2024, 03:16 PMI may be the only retail buyer on the exchange who looks at the 13% return and thinks...hmmm...

Hmmm as in good?  Or hmmm as in dividend yield trap?  Analysts have predicted that in future the dividend will be cut.

The dividend is not sustainable unless they found a way to grow money on trees

Quote from: entrep on Oct 16, 2024, 04:06 PMThe dividend is not sustainable unless they found a way to grow money on trees

More like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

Quote from: LoungeLizard on Oct 16, 2024, 04:16 PMMore like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

This is the same opportunity as buying CNU at under $2 a decade ago, all the naysayers and big sellers were proven wrong over time and will be the same here. Even if they cut the divvy to say 20c it will still be a good one and even then I only expect it to be a temporal drop for a year or so.

Quote from: Ferg on Oct 16, 2024, 04:03 PMHmmm as in good?  Or hmmm as in dividend yield trap?  Analysts have predicted that in future the dividend will be cut.

Maybe so yet the avg tp over 9 analysts is still $4.37 so lots of upside even in their eyes.

Quote from: Breezy on Oct 16, 2024, 04:29 PMMaybe so yet the avg tp over 9 analysts is still $4.37 so lots of upside even in their eyes.

LOL - analyst consensus? Not different to publishing the latest reading of ones tea leaves ...

... but I guess it is with the analysts as with the market. If they agree with us, they clearly must be spot on and right, and otherwise they must be wrong.

Let the analysts our of the game ... they don't know more about the future than any of us do (i.e. nothing) - and if any of them would have divine capabilities, they would not need to make money by publishing their horoscopes - oops - price targets and recommendations, wouldn't they?

We got a ways to go. FWIW I think this could be an excellent buy at some point. I would just prefer to wait.

From ChatGPT:

When a stock is removed from an MSCI index, it often triggers a selloff because many institutional investors and funds that track the index (such as index funds or ETFs) are required to adjust their portfolios to mirror the changes. Here's how the timeline you provided could influence the stock's price movements:

Announcement Date (November 6, 2024):
Once the removal is officially announced, some investors may start selling the stock in anticipation of further drops, knowing that index-tracking funds will eventually be forced to sell. This could lead to an initial selloff as investors react to the news.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this period, you may see gradual selloffs by investors who want to get ahead of the index funds. However, it is unlikely to see the biggest volume of trades here because index-tracking funds typically make changes closer to the effective date.

Effective Date (November 26, 2024):
The heaviest selloff is often expected just before or on the effective date. This is because the index funds that track MSCI will need to rebalance their portfolios on or right before this date to exclude the stock from their holdings. This concentrated selling pressure could lead to the largest drop in the stock price.

In summary, while some selling may occur after the announcement, the biggest selloff is most likely to happen around the effective date (November 26, 2024). Keep in mind that other market factors can also influence the timing and extent of the selloff.

Quote from: entrep on Oct 17, 2024, 10:15 AMWe got a ways to go. FWIW I think this could be an excellent buy at some point. I would just prefer to wait.

From ChatGPT:

When a stock is removed from an MSCI index, it often triggers a selloff because many institutional investors and funds that track the index (such as index funds or ETFs) are required to adjust their portfolios to mirror the changes. Here's how the timeline you provided could influence the stock's price movements:

Announcement Date (November 6, 2024):
Once the removal is officially announced, some investors may start selling the stock in anticipation of further drops, knowing that index-tracking funds will eventually be forced to sell. This could lead to an initial selloff as investors react to the news.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this period, you may see gradual selloffs by investors who want to get ahead of the index funds. However, it is unlikely to see the biggest volume of trades here because index-tracking funds typically make changes closer to the effective date.

Effective Date (November 26, 2024):
The heaviest selloff is often expected just before or on the effective date. This is because the index funds that track MSCI will need to rebalance their portfolios on or right before this date to exclude the stock from their holdings. This concentrated selling pressure could lead to the largest drop in the stock price.

In summary, while some selling may occur after the announcement, the biggest selloff is most likely to happen around the effective date (November 26, 2024). Keep in mind that other market factors can also influence the timing and extent of the selloff.

Those in the know like Blackrock will already know whats exactly going to happen, there has been above normal selling volume for a while now on certain days which means of course there has also been above normal buying .Of course over the medium to long term this index shuffle is just a blip to get through, as with the CNU selldown some of these big players are going to lose a huge amount of money.

Quote from: LoungeLizard on Oct 16, 2024, 04:16 PMMore like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

I think you mean losses on data centres.  The cost of setting up data centres is a constant drain.  Losses will be incurred for years.  And unlike CNU with a fibre buildout that is "one and done" after which it can sit back and harvest profits, building and expanding data centres is constant.  More capital (usually financed by more debt) brings more losses.  Only need to look at the last ten years of Next DC which a specialist data centre company in Australia. 


NXT.png

KW - I get you're down on data-centres, but perhaps then explain why IFT's investment in CDC both here and in Australia continues to grow? (EBITDAF up 26% for last year and projected growth of 20% this year). And why their success may not be emulated by Spark?

Nobody invests in new technology (renewables, electric cars)  expecting profits to be immediate. But if it's the right technology at the right time then the growth curve inexorably turns to profit. Provided of course that things are executed well.

It's a bit premature to say that Sparks investment won't pay-off in a reasonable time frame. Whilst their IT revenue generally was down fractionally, datacenter revenue was up over 50% from last year, and they are tracking ahead of other targets.

Personally I am pleased that Spark are getting behind this - it demonstrates proactivity in looking for other revenue streams to compliment the existing business. To stand still and ignore what most commentators say will be a huge new industry would be far more worrying.

Maybe all those people selling are dividend hounds with a much shorter investment time frame? 

Quote from: LoungeLizard on Oct 17, 2024, 02:49 PMKW - I get you're down on data-centres, but perhaps then explain why IFT's investment in CDC both here and in Australia continues to grow? (EBITDAF up 26% for last year and projected growth of 20% this year). And why their success may not be emulated by Spark?

What is the IFT dividend yield?  1.7%.  If you think SPK can pour money into data centres and still maintain their dividend, you are deluded.   That capital has to come from somewhere, and the market is telling you its going to come from shareholders pockets.

Quote from: KW on Oct 17, 2024, 03:21 PMWhat is the IFT dividend yield?  1.7%.  If you think SPK can pour money into data centres and still maintain their dividend, you are deluded.   That capital has to come from somewhere, and the market is telling you its going to come from shareholders pockets.

... maybe adding on that - nobody in their right mind expects IFT to make a lot of earnings from the income stream of their data centres, their renewables or any of their other investments. Like all infrastructure investments do these provide typically a very modest earnings ratio.

Infrastructure investors expect to make money from capital gains, which you get if your infrastructure has a monopoly (or quasi-monopoly) position. This is true for airports, electricity networks, large electricity generators (people don't like more power stations than required in their neighbourhood.

Data Centres on the other hand are easy to build, which means simple competition will make sure that data centres won't be an earnings bonanza - well, not for long anyway.

What's holding up the IFT share price is the reason that IFT used to be a couple of times quite cunning in buying cheap infrastructure and selling it before the market noticed that the Hype curve was about to turn down. Market thinks they keep doing that and expect them to keep living off speculation gains. No matter, whether markets expectation for IFT are justified (I don't think so) - but clearly nobody expects Spark to be as cunning as IFT used to be, though - they have been good in selling of their mobile towers, haven't they?

Anyway - market does not seem to rate Sparks ability to exploit the bigger fool theory (i.e. selling stuff before the buyers notice they have been cheated) as a constant income stream for Spark, which leaves them in markets view sitting on a shrinking Telecom income combined with constantly rising maintenance and power costs for their data centres. That's the reason the SP keeps dropping (next to the usual games around index exclusion).

Quote from: KW on Oct 17, 2024, 03:21 PMWhat is the IFT dividend yield?  1.7%.  If you think SPK can pour money into data centres and still maintain their dividend, you are deluded.   That capital has to come from somewhere, and the market is telling you its going to come from shareholders pockets.

I didn't say that Spark will maintain their dividend - I'm on record in saying that it may have to be cut (although that is not just because of their investment in data-centres).

 What I am saying is that Sparks investment in data-centres should make money down-the-line,  if they execute their plan well enough, just as they have for IFT,  who have been in the business longer. You seem to think that any investment in data centres is, of itself, a bad investment, because you don't think data-centres inherently make money. That just isn't the case, now, or certainly in a few years time, when data needs are going to go through the roof due to AI / cloud technology. If data centres aren't considered a good investment why has IFT's CDC gone up in value my nearly $800m in just the last year alone?

Anyway, we'll see who is right in a few years time. There are some people (you may be one of them) who are inherently against ANY cut in dividend (which in Sparks case hasn't actually happened yet) -  even if the business is using those funds to invest in new technology. I recall SKY being the darling of the market, paying huge special dividends, whilst refusing to believe that streaming technology was the future. That head-in the sand, short-term thinking didn't ultimately work well for the dividend obsessed shareholders did it?

Quote from: KW on Oct 17, 2024, 03:21 PMWhat is the IFT dividend yield?  1.7%.  If you think SPK can pour money into data centres and still maintain their dividend, you are deluded.   That capital has to come from somewhere, and the market is telling you its going to come from shareholders pockets.

SPK exists to pay dividends, it will pay the max it can for as long as its exists, the market was wrong with CNU and I'd suggest it will be proven wrong here as well over the longer term. Anyway I'm picking a drop to 20c next year which I'm quite happy with.

They should be able to fully impute a 20 cent dividend, (75% imputation credits apply at the current level).
20 cents fully imputed = 20/0.72 = 27.78 cps gross.  Choose what you think is an appropriate gross return.
10% suggests fair value = $2.78
9% suggests fair value = $3.08
The market at $2.99, in my opinion is saying it is deeply skeptical about future growth in earnings and expecting a dividend cut to about the level being discussed which would reflect a gross yield of 27.78 / 299 = 9.29%.

Love the Snoop dogs work on SPK on the other channel, his last paragraph of his last post (#2778) nailed it for me.
This talk of a dividend trap is just scaremongering and premature at this point in time and the dividend will still be good regardless.

I think Ferg has made some outstanding posts on SPK.  He's a qualified accountant and from what I have seen I think he does some exceptionally well considered work.  I have no idea what the other dog on the other channel does for a living but he has cost me money before, so this Beagle has learned not to follow him without doing his own comprehensive sniffing first.  The way I see it, if it exits the MSCI at the end of November there's only one way it will logically go between now and then and that's about all you need to know for now, other than to remember KW's sage advice in her signature line, "Don't drink and buy in a downtrend, you bloody idiot".  The way I see it, it could be worth getting some as a dividend yield investment, after, or as its being smashed down by the international investors during MSCI exit selling.  Put a ring around the date 29 November in your diary.  The closing match session on that day could be very interesting.

Quote from: LoungeLizard on Oct 17, 2024, 05:38 PMYou seem to think that any investment in data centres is, of itself, a bad investment, because you don't think data-centres inherently make money. That just isn't the case, now, or certainly in a few years time, when data needs are going to go through the roof due to AI / cloud technology. If data centres aren't considered a good investment why has IFT's CDC gone up in value my nearly $800m in just the last year alone?

Anyway, we'll see who is right in a few years time.

I spent most of my working life working for telcos - including Spark (or Telecom as I still call it).  I have literally BUILT a data centre for a large international IT services company.  But go on, tell me how I dont understand the data centre market  :o

Yesterdays data centres are not the same as tomorrow's data centres.  For starters, they are going nuclear.  What expertise does Telstra, or even NZ for that matter, have in nuclear energy?  You think they are going to run these things off the standard grid?  LOL.
https://www.interest.co.nz/technology/130316/aws-latest-go-nuclear-big-ai-powered-anti-harriswalz-bot-network-mapped-out-and

Quote from: KW on Oct 18, 2024, 02:21 PMI spent most of my working life working for telcos - including Spark (or Telecom as I still call it).  I have literally BUILT a data centre for a large international IT services company.  But go on, tell me how I dont understand the data centre market  :o

Yesterdays data centres are not the same as tomorrow's data centres.  For starters, they are going nuclear.  What expertise does Telstra, or even NZ for that matter, have in nuclear energy?  You think they are going to run these things off the standard grid?  LOL.
https://www.interest.co.nz/technology/130316/aws-latest-go-nuclear-big-ai-powered-anti-harriswalz-bot-network-mapped-out-and

I am saying that your understanding of the future of data centres is different to mine. No need to personalise the discussion.

Datacentres are not going nuclear, not in any timeframe that will bother the average investor. Google won't  even receive their reactors until 2035, let alone implement. Then there's all the red tape and environmental concerns to negotiate which will take years, even if approval is given, which to my mind is doubtful.
Anyway, it's all academic - NZ's information requirements will be easily served by the hyper scale datacentres in place and production. And then there's the little matter of NZ's non-nuclear policy...

The sensible discussion around datacentres is the use of renewables to take the demand off the grid - the same discussion we're having for industry and the economy in general. In that regard both IFT and Spark are on the ball.

Quote from: Basil on Oct 18, 2024, 01:21 PMI have no idea what the other dog on the other channel does for a living but he has cost me money before, so this Beagle has learned not to follow him without doing his own comprehensive sniffing first.

Thanks Basil

Very wise to do your own research.  Relying on random posters on the internet puts one at risk of things like invented definitions, very subtle qualifications, lies by omission and somewhat convincing arguments that state black is white. Plus we all prone to making genuine mistakes.

Caveat emptor!

Obviously people are hurting with Spark right now (been there, done that) and that can result in emotional exchanges which are best avoided.  But I would not want people to rely on half baked analyses that are focussing on the wrong thing for their investment decisions.  So I am happy to put up statements of fact that wrap some context around others analyses.  I also recommend investors have a healthy scepticism for Management BS (been there, seen and done that!).

But much like the tide or the seasons, Spark will turn at some point.  I predict they will continue to crank out reliable dividends, but at what rate?  I wouldn't assume any business can pay dividends partially funded by debt ad infinitum.  That's not saying how to run a business...that's common sense!  And selling the family silver once in a while to prop up equity and/or the dividend is also not good practice IMO.

DYOR  ;D

As pointed out on the other channel this whole index thing could be overblown, it could simply be moving furniture from one room in the house to another room in the same house at the end of the day. Would love to see some big players get a severe burning out of this one along with shorters.

Quote from: Breezy on Oct 19, 2024, 09:51 AMAs pointed out on the other channel this whole index thing could be overblown, it could simply be moving furniture from one room in the house to another room in the same house at the end of the day. Would love to see some big players get a severe burning out of this one along with shorters.

Yes, me too. It isn't even a dead cert that Spark will drop out of the index. Wouldn't it be so sad for the shorters if it stayed in  :'(

 Take of woe and misery  :'(  :(  :(  :o

First profit downgrade this year


https://announcements.nzx.com/attachment/430676.pdf 

Yep no surprises here....... SPK downgrade and dividend reduction.
 
 • EBITDAI1 guidance2 updated from $1,165-$1,220 million to $1,120-$1,180 million
 • Capex3 guidance updated from ~$460-$480 million to ~$415-$435 million
 • Dividend guidance updated from 27.5 cents per share to 25 cents per share, 75% imputed
 • Review of non-core assets underway, with decision made to divest Spark's shareholding in Connexa
 • SPK-26 Operate Programme expanded to deliver materially higher cost reductions over multi-year period

It will be interesting to see what other channel poster Snoopy makes of this. 

I've been following his analysis and see it as a classic case of holders bias. While Snoopy is excellent at analysing historic FA, IMO he struggles to lift his head to see the horizon ahead.

Quote from: winner (n) on Oct 30, 2024, 08:45 AMTake ofwoes  :'(  :(  :(  :o

First profit downgrade this year


https://announcements.nzx.com/attachment/430676.pdf 

Pretty soft downgrade and divvy 25c although only 75% imputed, still a stout divvy and more than I thought (20 cents was my estimate) As a retirement hold for my wife and myself we look through this period.
Reading through their plan to drive future value , it all looks pretty much on the right track kinda stuff to me.

Divie likely to be 25 cents 75% imputed

That's a huge pay cut from 38.2 cents gross F24 ...16% less

Quote from: winner (n) on Oct 30, 2024, 08:54 AMDivie likely to be 25 cents 75% imputed

That's a huge pay cut from 38.2 cents gross F24 ...16% less

Depends what tax rate you are on and whether you can fully utilize the imps, id say most older holders of this stock can't so the 75% will make little difference.

Quote from: winner (n) on Oct 30, 2024, 08:45 AMTake of woe and misery  :'(  :(  :(  :o

First profit downgrade this year


https://announcements.nzx.com/attachment/430676.pdf 

Oh dear - wondering what this will do to the SP?

On the other hand - they said they are updating their downgrade ... nice choice of words ...

Didn't balance on the other channel used to say these things normally come in threes? But then, even balance is not always right.

Trend chart looks inspirational (well, for shorters, this is):





SPK downripple - Copy.JPG

Looks like a perfect buying opportunity to me just like CNU all those years ago when I was drastically wrong, just don't have the money to do so unfortunately.

With the MSCI index selling to come too.

No matter what people read into this "update" - it definitely is a worthwhile candidate for nomination as "masterpiece of corporate speak".

Here are some amazing gems:

" increased price erosion at contract resigning and aggressive competitive pricing activity."

" However, in IT products the mix shift between private and public cloud has accelerated, impacting margins."

" We recognise that we have a lot of work ahead of us to win back the confidence of our shareholders ..."


No doubt - the future they describe looks gloomy :) ; Are they pitching for a vampire audience ...?

Quote from: Breezy on Oct 30, 2024, 09:44 AMLooks like a perfect buying opportunity to me just like CNU all those years ago when I was drastically wrong, just don't have the money to do so unfortunately.

Might be lucky - hey, it could turn out to be an ATM instead?

Quote from: BlackPeter on Oct 30, 2024, 10:06 AMMight be lucky - hey, it could turn out to be an ATM instead?

Thst be good ..ATM up 40% from recent lows

Quote from: winner (n) on Oct 30, 2024, 10:14 AMThst be good ..ATM up 40% from recent lows

And bang on my 2 yr tp of around $4.20ish.

Quote from: winner (n) on Oct 30, 2024, 10:14 AMThst be good ..ATM up 40% from recent lows

True ... their SP first dropped by 80% (down from a stellar nearly $22), and then it went 40% from the bottom up again (to something like $6.50).

Not the best strategy to make money, if I may say so ... unless you short on the way down and hold on the way up.

Note: Spark currently appears to be on the way down ...

Market has reacted sensibly - or perhaps not over-reacted -  as the SP had priced in Armageddon anyway. SP up 6c atm. Revised dividend forecast as expected and not a game changer - 25c on a SP of $3 is a good return whilst they reset the business. Selling of 17% stake in Connexa will help pay down debt and perhaps at these SP levels, another share buyback might be on the cards. I don't see the SP going down much below $3, regardless of the MSCI index machinations to come. This over-selling has been partly manufactured and will be corrected in due course imo.

Quote from: LoungeLizard on Oct 30, 2024, 11:02 AMMarket has reacted sensibly - or perhaps not over-reacted -  as the SP had priced in Armageddon anyway. SP up 6c atm. Revised dividend forecast as expected and not a game changer - 25c on a SP of $3 is a good return whilst they reset the business. Selling of 17% stake in Connexa will help pay down debt and perhaps at these SP levels, another share buyback might be on the cards. I don't see the SP going down much below $3, regardless of the MSCI index machinations to come. This over-selling has been partly manufactured and will be corrected in due course imo.

Yep Armageddon priced in already and as far as I'm aware that event is yet to occur.

Avg tp of $4.05 over 9 analysts with an Outperform rating after latest downgrade, about right IMO and $4.20 my 2 yr tp estimate.

Quote from: Breezy on Nov 01, 2024, 08:38 AMAvg tp of $4.05 over 9 analysts with an Outperform rating after latest downgrade, about right IMO and $4.20 my 2 yr tp estimate.

I am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.     

Quote from: seaweed on Nov 01, 2024, 10:30 AMI am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.     

Yep get that done and dusted and with interest rates continuing to fall punters will be looking for yield. Rather buy this than fully priced stocks like IFT/SUM/HLG and the like.

Quote from: seaweed on Nov 01, 2024, 10:30 AMI am getting 8.6% yld at $2.89c. ASB is giving me 5.67% interest so have decided to buy 5,000 to 10,000 more every time it drops 5c which is going against all the rules in don't buy in a down trend. When all the dust settles and all the shorters have gone and the MSCI finished selling then what. It will get so low then it can only go back up. Or is that too simple.   

It appears that whoever is selling (and it appears many do) is making different working assumptions about the stocks future earnings potential than you are. Whether they will be right or whether you are - this jury is still out. Sure - it could be a case of brainless index funds having to sell ... but given that these index funds are just followers, somebody with a brain must have started.

Anyway - apart from that you might want to rethink the validity of your statement : "It will get so low then it can only go back up"

While it is correct, that most stocks bounce somewhat back after such a spectacular down leg (its just physics), there is absolutely no guarantee that this "somewhat" will be higher then your purchase price on the way down ... and yes, sadly, I can think as well about some stocks which didn't bounce back at all - i.e. they may or may not bounce back.

From a personal point of view, I don't expect them to roll up their toe nails anytime soon, but I see them as a quite mediocre "me too" in a market with increasing competition, fast dropping margins and short investment cycles. They still need to drop a bit to even reach some acceptable value based on their earnings .. and are based on their earnings value in my view likely to drop some further, to give them afterwards some upwards momentum.

While I am sometimes as well buying stocks in a downtrend (yes, I know - don't look at my fingers :) ), I never do this when the stock price is still above a sensible assumption of their earnings value. Bargepole scenario.

Anyway - good luck - what could possibly go wrong?

NBR had an article about Spark shooting itself in the foot about its recent $300m buyback

Good article but not as good as this Comment -


THURSTON-WAFFLES
FRI, 01 NOV 2024 - 7:46:55AM

The Slaughterhouse that is Spark is a very interesting exercise in watching Retail (Dumb) Money transfer wealth to Institutional (Smart) Money. Consistently, for many months now, Spark has been in the Top 10 (and usually #1) buys for Jarden clients as the share privce continually withers.

Meanwhile, instos, sniffing the rapidly detiorating balance sheet situation and knowing it will drop out of MSCI indices, have been shorting the bejeezus out of it. The psychological show is also on full display on forums such as Stock Talk and Sharetrader.

No doubt there will be continued declines, especially with the latest downgrade (first of many?) into the MSCI rebalance in late November, all while retail continue to engage in a classic dividend trap scenario and hoover up "cheap" shares.

Data centres are not cheap (look at the recent NXT capital raising to fund further centres) and the scale on which Spark is entering the market is already as an also, also ran.

More debt + selling the family silver + declining key balance sheet numbers = vicious cycle.

Don't drink and buy shares in a downtrend, folks
Reply

Quote from: winner (n) on Nov 01, 2024, 07:23 PMNBR had an article about Spark shooting itself in the foot about its recent $300m buyback

Good article but not as good as this Comment -


THURSTON-WAFFLES
FRI, 01 NOV 2024 - 7:46:55AM

The Slaughterhouse that is Spark is a very interesting exercise in watching Retail (Dumb) Money transfer wealth to Institutional (Smart) Money. Consistently, for many months now, Spark has been in the Top 10 (and usually #1) buys for Jarden clients as the share privce continually withers.

Meanwhile, instos, sniffing the rapidly detiorating balance sheet situation and knowing it will drop out of MSCI indices, have been shorting the bejeezus out of it. The psychological show is also on full display on forums such as Stock Talk and Sharetrader.

No doubt there will be continued declines, especially with the latest downgrade (first of many?) into the MSCI rebalance in late November, all while retail continue to engage in a classic dividend trap scenario and hoover up "cheap" shares.

Data centres are not cheap (look at the recent NXT capital raising to fund further centres) and the scale on which Spark is entering the market is already as an also, also ran.

More debt + selling the family silver + declining key balance sheet numbers = vicious cycle.

Don't drink and buy shares in a downtrend, folks
Reply

I wonder what name this guy/gal uses on here or on ST, I reckon i would have a good chance at picking a match. Always good when Insto holdings decrease in size and retail increases. PS-Instos losing heaps at the moment selling so not really that smart after all, they were pretty dumb with CNU back in the day.

Quote from: winner (n) on Nov 01, 2024, 07:23 PMNBR had an article about Spark shooting itself in the foot about its recent $300m buyback

Good article but not as good as this Comment -


THURSTON-WAFFLES
FRI, 01 NOV 2024 - 7:46:55AM

The Slaughterhouse that is Spark is a very interesting exercise in watching Retail (Dumb) Money transfer wealth to Institutional (Smart) Money. Consistently, for many months now, Spark has been in the Top 10 (and usually #1) buys for Jarden clients as the share privce continually withers.

Meanwhile, instos, sniffing the rapidly detiorating balance sheet situation and knowing it will drop out of MSCI indices, have been shorting the bejeezus out of it. The psychological show is also on full display on forums such as Stock Talk and Sharetrader.

No doubt there will be continued declines, especially with the latest downgrade (first of many?) into the MSCI rebalance in late November, all while retail continue to engage in a classic dividend trap scenario and hoover up "cheap" shares.

Data centres are not cheap (look at the recent NXT capital raising to fund further centres) and the scale on which Spark is entering the market is already as an also, also ran.

More debt + selling the family silver + declining key balance sheet numbers = vicious cycle.

Don't drink and buy shares in a downtrend, folks
Reply

Hey, who's stolen my tag line?  I need to trademark that I think!

Sometimes its interesting to look at really long term trends.  The 10 year trend for SPK broke down in May.

Screenshot 2024-11-03 161442.png

Quote from: Breezy on Nov 01, 2024, 07:54 PMI wonder what name this guy/gal uses on here or on ST, I reckon i would have a good chance at picking a match. Always good when Insto holdings decrease in size and retail increases. PS-Instos losing heaps at the moment selling so not really that smart after all, they were pretty dumb with CNU back in the day.

Definitely not me but the author makes some good points.  The dividend is unsustainable and you can only load up on so much debt for no discernible benefit before it needs to be addressed.

Quote from: Ferg on Nov 03, 2024, 04:55 PMDefinitely not me but the author makes some good points.  The dividend is unsustainable and you can only load up on so much debt for no discernible benefit before it needs to be addressed.

Well yes thats why its been trimmed but I expect things to rectify themselves with the measures they have underway. In the meantime still a good divvy.

Quote from: Breezy on Nov 03, 2024, 06:09 PMI expect things to rectify themselves with the measures they have underway.

Past behaviour is a good indicator of future behaviour. Spark took measures by selling a majority stake in Connexa and they had a chance to transform debts & the Balance Sheet but they blew it. Now they are looking at selling the rest of Connexa and possibly the Southern Cross Cable. This looks like selling the family silverware....the SCC is akin to a 'gateway' or a 'toll booth'.....IMO something that should not be sold. Maybe Directors and Management will do a better job this time.....but I doubt it given there have been no significant exec changes, other than the CFO.

Quote from: Breezy on Nov 03, 2024, 06:09 PMIn the meantime still a good divvy.

For now.  Until it gets cut again.  It needs to be lower than cash earnings so that future shareholders are not saddled with debts used to prop up dividends for current shareholders, as Spark has been doing for some time.

Quote from: Ferg on Nov 03, 2024, 08:04 PMPast behaviour is a good indicator of future behaviour. Spark took measures by selling a majority stake in Connexa and they had a chance to transform debts & the Balance Sheet but they blew it. Now they are looking at selling the rest of Connexa and possibly the Southern Cross Cable. This looks like selling the family silverware....the SCC is akin to a 'gateway' or a 'toll booth'.....IMO something that should not be sold. Maybe Directors and Management will do a better job this time.....but I doubt it given there have been no significant exec changes, other than the CFO.
For now.  Until it gets cut again.  It needs to be lower than cash earnings so that future shareholders are not saddled with debts used to prop up dividends for current shareholders, as Spark has been doing for some time.

Those assetts are classified as non strategic by the company. The share buy back was not the right choice at the time so a lesson to learn there.
Even with another 5c off the divvy it would still be okay, I expect this as the worst case scenario but it may or may not occur. As a 10 yr hold the current period matters little, I look through the next couple or so yrs as I should have done with CNU all those yrs ago, lesson learned.

https://www.harbourasset.co.nz/research-and-commentary/harbour-navigator-dividend-illusion/?_cldee=BmyXHlgYGdOgQdegYHJhn9gArF7ancRpM2IpypyIBMVrt5M6qsDohRMyL9_TYG8l&recipientid=contact-103efa936911cd3da9415a8232cf7847-a96d005841214fdbab914f15eb4febb8&esid=02871eda-0398-ef11-8a68-000d3aca7b91

Quote from: Basil on Nov 04, 2024, 10:12 AMhttps://www.harbourasset.co.nz/research-and-commentary/harbour-navigator-dividend-illusion/?_cldee=BmyXHlgYGdOgQdegYHJhn9gArF7ancRpM2IpypyIBMVrt5M6qsDohRMyL9_TYG8l&recipientid=contact-103efa936911cd3da9415a8232cf7847-a96d005841214fdbab914f15eb4febb8&esid=02871eda-0398-ef11-8a68-000d3aca7b91

Looks like harbour is reading this thread and following the more sensible posts :) ;

Quote from: BlackPeter on Nov 04, 2024, 12:23 PMLooks like harbour is reading this thread and following the more sensible posts :) ;

Sensible posts only prove themselves to be so over time, until then they are just speculation like the others.

Quote from: Ferg on Sep 29, 2024, 09:59 PMPutting all that together, EPS has a negative CAGR of -1.6% per annum over the past 10 years.  This will flip to being positive if EPS in 2025 exceeds 20c.  Let's say SPK can get back to 22c per share, would it qualify as a 'no growth' company?

Is it time to consider buying in towards the end of the month when its exits the MSCI index ? (I believe this occurs on 29 Nov but DYOR on that).
I missed this question from Ferg's extensive high-quality post some time back.
I think the answer is no, if a company has a ten-year CAGR in eps of negative 1.6% that suggests a systemic problem with losing market share and / or margin contraction or inability to recover increased costs.  Average broker forecast is that eps will not get back to 22 cps any year soon.  I will stick with the time proven Ben Graham no growth PE of 8.5, adjusted for lower equity risk premiums these days = 10, but using my own value filter of adding or subtracting 1 PE for every 1% projected move in eps in the years ahead, on past history that suggests a fair PE of 10-1.6 = just 8.4 times estimated FY25 eps.
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/
I note the average earnings of 9 analysts for the next 3 years is 18.63cps, 19.69 and 21.13 cps, all lower than the 10-year average of 23 cps that Ferg has worked out.

I'm staying well away.  Even after the recent share price correction, at $2.88 a forward PE of 15.5 makes no sense whatsoever to me for a company that is at very best, a no growth company but one for which a solid argument can be made that, especially in real inflation adjusted terms, earnings per share are in systemic decline.   

Quote from: Basil on Nov 04, 2024, 12:54 PMIs it time to consider buying in towards the end of the month when its exits the MSCI index ? (I believe this occurs on 29 Nov but DYOR on that).
I missed this question from Ferg's extensive high-quality post some time back.
I think the answer is no, if a company has a ten-year CAGR in eps of negative 1.6% that suggests a systemic problem with losing market share and / or margin contraction or inability to recover increased costs.  Average broker forecast is that eps will not get back to 22 cps any year soon.  I will stick with the time proven Ben Graham no growth PE of 8.5, adjusted for lower equity risk premiums these days = 10, but using my own value filter of adding or subtracting 1 PE for every 1% projected move in eps in the years ahead, on past history that suggests a fair PE of 10-1.6 = just 8.4 times estimated FY25 eps.
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/
I note the average earnings of 9 analysts for the next 3 years is 18.63cps, 19.69 and 21.13 cps, all lower than the 10-year average of 23 cps that Ferg has worked out.

I'm staying well away.  Even after the recent share price correction, at $2.88 a forward PE of 15.5 makes no sense whatsoever to me for a company that is at very best, a no growth company but one for which a solid argument can be made that, especially in real inflation adjusted terms, earnings per share are in systemic decline.   

Yes best you stay well away and leave it to us that have been involved with the stock for more than a decade and will do so for the next decade.

I see your above post as just another veiled personal attack (Your personal vendetta started on the other channel re discussions on covid and climate change and you have kept it going, its not acceptable in any way) SPK and CNU were once part of the same company and are still in the same sector so it is apples with apples. By the way I don't have any more money now than an average person of my age would have.

For all the arguments against Spark presented here, they are basically a replication of the arguments by analysts and rating agencies. But - and here's the rub -  even after those agencies have blasted Spark for their debt, badly managed buyback, dividend cut etc, the average target price of all the major agencies is $4.00 per share.

So if one is going to quote agencies' opinions about earnings per share etc, then why not follow through with what those same agencies are saying about the share price? Otherwise it's just cherry picking.
Regardless of the well-trodden arguments, the fact remains the current SP doesn't bare any resemblance to fair value - the short-term TA  may look bad but it's a historically anomaly and with a longer lens than some are using, it demonstrates just how oversold (and shorted) Spark has become.

And as far as "smart" or "dumb" money is concerned, the absolute dumbest thing to do is to give in to the fear (and the manipulations of a few institutions) and sell low. The smart thing is to let those people sell, and if one has the money (and nerve) to buy where there is value, even if it means going against the trend. That, after all, is what people like Buffet would do.

I had thought that $3 might see the end of the sell-off, but the dumb money has no limits it seems. The MSCI index thing is a red herring I believe, designed to push the price lower. I'm continuing to add, taking a 9% return in the meantime.

No worries for Spark. NBR has a big headline

Spark's shine dims but data centres could light a new path

Quote from: winner (n) on Nov 04, 2024, 02:21 PMNo worries for Spark. NBR has a big headline

Spark's shine dims but data centres could light a new path

That's a red rag to a few bulls. Or should it be bears?

Quote from: LoungeLizard on Nov 04, 2024, 02:03 PMFor all the arguments against Spark presented here, they are basically a replication of the arguments by analysts and rating agencies.

I can't recall seeing any analyst reports that pre-date what I said in my posts back on 29/30 September, other than post #159 by KW on 21 September.  I don't subscribe to any sort of analyst service or website so that was original work in my search for a good dividend stock.  The analysts have been replicating and regurgitating the arguments put up by me and KW....and some media commentators are making reference to the stocktalk & sharetrader websites so maybe we should be getting some credit..... ;)

https://www.downtoearth.kiwi/post/is-lack-of-diversity-of-its-leadership-one-reason-for-spark-s-plummeting-share-price-and-performance

How can the Chair and CEO still be there after overseeing the company's value drop by circa $5 billion in under 12 months?

Quote from: Ferg on Nov 04, 2024, 04:08 PMI can't recall seeing any analyst reports that pre-date what I said in my posts back on 29/30 September, other than post #159 by KW on 21 September.  I don't subscribe to any sort of analyst service or website so that was original work in my search for a good dividend stock.  The analysts have been replicating and regurgitating the arguments put up by me and KW....and some media commentators are making reference to the stocktalk & sharetrader websites so maybe we should be getting some credit..... ;)

Fair enough. You might have been ahead of the game there Ferg, and all credit to you. Myy point is though, that if the agencies are now detailing some of the problems with Spark you have foretold, but still unanimously agree that it's a $4+ stock, then either they are all wrong in their valuation, or more likely, what we are seeing is just an over-reaction or possibly a short-selling campaign.

This from Morningstar, who I find more objective than other industry-connected rating agencies. It's just a synopsis free on ASB trading platform. Their valuation, despite the critique, is $4.30 per share.


Event analysis

Spark New Zealand: A Dull Outlook

We cut our fair value estimate for Spark by 7% to NZD 4.30 per share, or AUD 3.90 at current exchange rates. This follows the 6% reduction just two months ago, which reflected structural cost issues in the group's IT units. This time around, the cause for our downgrade is more sinister: deteriorating revenue trends in the core mobile unit—the engine that drives earnings and cash flow for the whole group.

We appreciate that the economic conditions in New Zealand are tough. However, the abrupt downturn in management's outlook for fiscal 2025 mobile service revenue, from 3% just two months ago to now "largely flat," is concerning. The forecast flat mobile service revenue outcome in fiscal 2025 would be the first since the covid-19 year of fiscal 2021 and in sharp contrast to the average 5% growth reliably delivered since fiscal 2018, excluding the pandemic year. Competition is heating up much faster than expected for connections and average revenue per subscriber. Even management is unsure whether Spark is losing market share in subscribers or revenue.

As such, we reduce our earnings before interest, tax, depreciation, amortization, and investment income forecasts by around 5%, primarily due to cuts to our mobile revenue expectations. We also further revise our margin assumptions for IT-related units to reflect the accelerating product mix shift from the private cloud and to the lower-margin public cloud. Critically, we reduce our dividends per share forecast by around 10%, with our fiscal 2025 projection of NZD 0.25, 75% imputed, in line with management's guidance.

Quote from: 850man on Nov 04, 2024, 04:29 PMHow can the Chair and CEO still be there after overseeing the company's value drop by circa $5 billion in under 12 months?

This is something you should ask the holders, but listening to some of the posts here - they seem to be quite happy with the companies performance, so - why get rid of the winning team which brought them there?

Quote from: LoungeLizard on Nov 04, 2024, 04:55 PMFair enough. You might have been ahead of the game there Ferg, and all credit to you. Myy point is though, that if the agencies, as you say, are now detailing some of the problems with Spark you have foretold, but still unanimously agree that it's a $4+ stock, then either they are all wrong in their valuation, or more likely, what we are seeing is just an over-reaction or possibly a short-selling campaign.

Thanks for that.  Although it seems the institutional part of Mr Market had figured that out with the intense selling pressure, but kept that knowledge to themselves while selling to retail clients.

Fair point but maybe it is all of the above.  They may be wrong with their valuation, and it may be an over-reaction and it may be a short selling campaign (or any combination thereof).  How can the 1st be true in light of the other 2?  Ask yourself who benefits from a higher TP.  Maybe the very analysts trying to exit their own positions before others...perhaps?  That is cynical speculation by me but when you have other learned posters detailing their valuation methods (being EPS x some factor) and coming up short of the collective TP, that makes me wonder how/why analysts have a high TP relative to the SP.  Are they transparent with their TP methods so we can scrutinise their inputs?  If not, then I wouldn't place any value on a TP that does not disclose how it was derived.

I have no doubt this will turn at some point, but not today and possibly not for another 12 months.  I will wait for the green shoots and good news cycle before putting any $$ into Spark but I will continue watching.

But this line is concerning:

QuoteEven management is unsure whether Spark is losing market share in subscribers or revenue.

My analysis was centred more on the Balance Sheet, dividend sustainability and debts which are more structural in nature...that line from Morningstar points to operational issues.  If mobile is the engine of the business, then they should have multiple fingers on the pulse...are they saying they don't?  But taking on so much debt for no EPS benefit means that when the worm turns on operations, then it bites the business twice as hard given there are fewer options for carrying a bad year or 2 on the Balance Sheet.  Although they may get some relief from falling interest rates....but I view that as the silver lining.

Quote from: LoungeLizard on Nov 04, 2024, 04:55 PMFair enough. You might have been ahead of the game there Ferg, and all credit to you. Myy point is though, that if the agencies are now detailing some of the problems with Spark you have foretold, but still unanimously agree that it's a $4+ stock, then either they are all wrong in their valuation, or more likely, what we are seeing is just an over-reaction or possibly a short-selling campaign.

...

Come on - you mean you didn't notice yet that analysts forecasts are absolutely meaningless for - well, lets say uncorrelated to - the actual price a stock reaches after a year (for the one year consensus)? The only value forecasts do have is that they provide some input into the markets mood. Always good to understand the mood.

Some analysts do add value with their analysis by accurately describing the past. Some might see more than others, but it is at best good detective work they provide. No soothsaying. It is possible to learn from what they wrote. However - analysts are just human beings as well, and no human is able to predict future stock prices. Which means, if you would do an analysis of their forecasts (which you clearly didn't do), you would know that price forecasts are absolutely meaningless. They are the output of some models determining a theoretical value of some stock under a lot of working assumptions and afterwards corrected with the SP of the day.

Ever noticed that forecasts tend to follow the stock price (Have a look into marketscreener)? Ever wondered why?

Quote from: entrep on Nov 04, 2024, 04:24 PMhttps://www.downtoearth.kiwi/post/is-lack-of-diversity-of-its-leadership-one-reason-for-spark-s-plummeting-share-price-and-performance

Thanks for that Entrep.  A boardroom full of BCom and LLB degrees is not diverse.  More engineers and technically minded people would improve diversity.  It's a shame the proponents of diversity don't focus on this aspect; instead they focus on other factors.

Seeing the qualifications and experience of the Chair and CEO makes me wonder if the CFO was the fall guy for the dismal share buyback.  Or maybe he was the only honourable one?  Interesting thought experiment...

Quote from: BlackPeter on Nov 04, 2024, 05:35 PMCome on - you mean you didn't notice yet that analysts forecasts are absolutely meaningless for - well, lets say uncorrelated to - the actual price a stock reaches after a year (for the one year consensus)? The only value forecasts do have is that they provide some input into the markets mood. Always good to understand the mood.

Some analysts do add value with their analysis by accurately describing the past. Some might see more than others, but it is at best good detective work they provide. No soothsaying. It is possible to learn from what they wrote. However - analysts are just human beings as well, and no human is able to predict future stock prices. Which means, if you would do an analysis of their forecasts (which you clearly didn't do), you would know that price forecasts are absolutely meaningless. They are the output of some models determining a theoretical value of some stock under a lot of working assumptions and afterwards corrected with the SP of the day.

Ever noticed that forecasts tend to follow the stock price (Have a look into marketscreener)? Ever wondered why?

No one can predict the future you say, but isn't that exactly what we are all trying to do here, including yourself? Isn't that what Buffet is doing (usually accurately) when he puts money, ahead of "the market" into certain business's and industries. Investing is ALL about predicting the future -  succesful investing is doing it well.

I'm the last one who will invest on the basis of what an analyst might say, particularly the likes of Jardens who work with and invest in the very business's that they are "independently" analysing. What I am interested in is value - and how various parties using the same set of data can come to different conclusions. My own feeling is that the market, although always right in the sense that it states what the price actually is, is often wrong in assessing true value. This can be for a 1001 reasons, none of which have anything to do with value. That's the skill of an investor - to separate the noise, the sentiment, the gaming, from the facts that indicate value and, ultimately, price.

 

Quote from: LoungeLizard on Nov 04, 2024, 07:59 PMNo one can predict the future you say, but isn't that exactly what we are all trying to do here, including yourself? Isn't that what Buffet is doing (usually accurately) when he puts money, ahead of "the market" into certain business's and industries. Investing is ALL about predicting the future -  succesful investing is doing it well.

...
 

I think we had this discussion before. so just short for anybody new to it. Investing is NOT about predicting the future, because no mortal is able to do that. Investing is about picking the best possible vessel (company) and the most experienced team to navigate an unknown future.

If you pick a good quality vessel with an experienced and proven team you are more likely to succeed with your mission (safeguard and increase your capital) than if you pick a clapped out vessel run by a bunch of inepts. However - nobody can predict beforehand where your vessel will end up, and whether it will get into a hurricane or be shot at by terrorists or pirates. Could happen to both vessels, and both could go down or survive, couldn't they? However - statistically seen you know that the chances of the good vessel with the experienced crew are better to complete their mission than the chances of the alternative.

That's all. This is not about predicting the future, it is improving your odds to have a favourable future.

Yeah I'm calling bollocks on that - investing is about predicting the future.  I predict that in future Spark will have to reduce their debts and this will become a hot topic.  I predict they will do this by reducing the dividend and capex for years beyond the current and next fiscal year.  By examining the past we can predict the required corrective actions, and how that impacts our investment and future returns.  I think where LL and I differ on this is the SP reaction to these predicted actions.

Agree with Ferg. eps of 18 cps and dps of 25 cps means the business is paying more than it can sustain.

HGH has been paying more than the business model it runs can sustain and their share price is in the toilet too.

Quote from: Basil on Nov 05, 2024, 10:09 AMAgree with Ferg. eps of 18 cps and dps of 25 cps means the business is paying more than it can sustain.

HGH has been paying more than the business model it runs can sustain and their share price is in the toilet too.

Could say Heartland had capital raises to pay divies ....Spark ain't done that ...yet

I agree with Ferg's analysis of the current situation and even the predictions around Sparks future actions, but as noted, we differ in where the SP should be, despite all of that. I remain convinced that the current level is grossly undervaluing Spark's worth and once the MSCI index issue (and the corresponding shorting) are settled I expect the SP to start moving quite quickly (12 months) back to $4. That's my prediction for what it's worth.  ;)

Quote from: LoungeLizard on Nov 05, 2024, 11:20 AMI expect the SP to start moving quite quickly (12 months) back to $4. That's my prediction for what it's worth.

$4 in 12 months = 20.4 times forward earnings for FY26 based on the average of 9 analysts current expectations.
That for a company with a 10 year CARG in eps of minus 1.6%.  Hmmm...good luck with that.  For the life of me I don't know how the analysts get to their $4 target price.  I guess they are expecting a heck of a lot of future growth from Spark's datacenter.  That's got to be funded somehow, more debt, surely not ?...so an equity raise looks likely.  Just as well we know these sort of new capital investments are always eps accretive right from the start eh  ;)
How's Next DC getting on ?

Quote from: Ferg on Nov 04, 2024, 06:03 PMThanks for that Entrep.  A boardroom full of BCom and LLB degrees is not diverse.  More engineers and technically minded people would improve diversity.  It's a shame the proponents of diversity don't focus on this aspect; instead they focus on other factors.

Seeing the qualifications and experience of the Chair and CEO makes me wonder if the CFO was the fall guy for the dismal share buyback.  Or maybe he was the only honourable one?  Interesting thought experiment...

Its not the qualifications that is the issue, its the lack of telco experience and the ability to understand technology and customer usage changes coming down the line.  You dont go from selling beer to selling mobile plans.  I have both a BCom and a LLB, no engineering qualifications, yet my last telco job was advising the C-Suite as to what their future strategy should be.  They however, chose not to listen to me.  This is has been a repetitive experience in my career - those at the top do not listen to those who are advising them. 

Wee anecdote - I told the Telstra CEO and VP of Mobile that they needed to start selling mobile plans that were priced based on data allocations, not call minutes.  They said no way.  About a year later Optus launched their mobile plans priced on data inclusions, which meant Telstra was then 18 months behind the eight ball in catching up (as it takes that long to build something within Telstra, another problem that plagued it).  Of course, these days pretty much every mobile plan is based around data allowances, but instead of being first in market and a leader, they became a last to market follower, losing a lot of subscribers in the intermittent period.  I 100% guarantee that Spark is exactly the same.

Another anecdote - having a lot of engineers doesnt help either.  They cant see past the engineering, and do not understand the use case of the technology.  The Australian NBN Co was set up with a ton of ex-Telstra engineers.  One of their top product people rang me and asked me what was going to be the killer app for the NBN, because they couldnt understand why anyone would want a full fibre to the home product.  "Who would ever use that much bandwidth?" he asked.  I said it will be video.  They carried on building a NBN based on the old copper network, and the rest as they say, is history.

Quote from: Ferg on Nov 05, 2024, 09:45 AMYeah I'm calling bollocks on that - investing is about predicting the future.  I predict that in future Spark will have to reduce their debts and this will become a hot topic.  I predict they will do this by reducing the dividend and capex for years beyond the current and next fiscal year.  By examining the past we can predict the required corrective actions, and how that impacts our investment and future returns.  I think where LL and I differ on this is the SP reaction to these predicted actions.

They cant reduce their debt.  They will have to borrow more.  Where do you think the money for building data centres is going to come from?  Those things are EXPENSIVE.

Either that or a capital raise.  Or cancel the dividend entirely.

Quote from: KW on Nov 05, 2024, 11:51 AMThey cant reduce their debt.  They will have to borrow more.  Where do you think the money for building data centres is going to come from?  Those things are EXPENSIVE.

Either that or a capital raise.  Or cancel the dividend entirely.

You're forgetting that Spark have committed to selling their stake in Connexa which apparently is valued at $275m and is not a strategic asset for them. That might help keep the wolves from the door for a while.

Quote from: Basil on Nov 05, 2024, 11:42 AM$4 in 12 months = 20.4 times forward earnings for FY26 based on the average of 9 analysts current expectations.
That for a company with a 10 year CARG in eps of minus 1.6%.  Hmmm...good luck with that.  For the life of me I don't know how the analysts get to their $4 target price.  I guess they are expecting a heck of a lot of future growth from Spark's datacenter.  That's got to be funded somehow, more debt, surely not ?...so an equity raise looks likely.  Just as well we know these sort of new capital investments are always eps accretive right from the start eh  ;)
How's Next DC getting on ?

Well, that's the interesting thing. Analysts apply the same methodology and knowledge of Sparks problems and the average still comes up with $4. Who's right or wrong? I'm not a fan of just using PE projections to determine SP - they so often don't take into account the macroeconomic picture. My feeling - gut instinct mainly - is that there is no basis for a 50% decline in Sparks SP. It looks and feels like a temporary blip, which happen all the time, up and down. Over time I expect Spark to gravitate upwards to it's "natural" SP point of $4 initially, and $5 in the longer term.

Well hat tip to you, you got HGH right so it will be interesting to see how you get on with this one.  Best of luck with it.

Quote from: Ferg on Nov 04, 2024, 06:03 PMThanks for that Entrep.  A boardroom full of BCom and LLB degrees is not diverse.  More engineers and technically minded people would improve diversity.  It's a shame the proponents of diversity don't focus on this aspect; instead they focus on other factors.

Agreed BUT did you look at ze composition of ze board outside of ze Chair and CEO?

-----------------
Alison Barass:  BSc from University of Southampton, Diploma in Marketing University of Auckland.  Fast Moving Consumer Goods sector experience.
David Havercroft: 35 year career in technology, including IBM Asia Pacific, Cable & Wireless and BT
Gordon MacLeod:  Finance director of Cambridge Science park start up and following that a 15 year tenure at Ryman's.
Lisa Nelson:   Former managing director of M12 Microsoft's venture fund, and before that several other senior roles at Microsoft (lives in Seattle USA). Certified Public accountant
Sheridan Broadbent::  Career spanning telecommunications, ICT , infrastructure and energy.  BCom from University of Auckland.
Warwick Bray:   Four decades of telecommunications industry experience, mostly with Telstra.     Holds a BSc and MBA from the University of Melbourne
-----------------

Not another lawyer among them.    And even ze BCom's have many years of telecommunications experience in zheir bones.

Does the vull board tick ze diversity box?   I vould say 'yes'.

RB

Quote from: Basil on Nov 05, 2024, 12:38 PMWell hat tip to you, you got HGH right so it will be interesting to see how you get on with this one.  Best of luck with it.

Cheers Basil. I'll be the first to hold my hand up if Spark are $2.50 or even $3.00 in 12-18 months time. That's the time frame I'm happy to keep holding for and even acquire more. After that, well it may be that Spark does have structural problems that might take years to correct, in which case you have to know when to wave the white flag.
That's the interesting thing about this investing lark - everyone's right until the future proves them wrong. We're not there yet with Spark - this current downturn could be the start of an endemic decline like WHS or FBU or countless others, or it could just be a temporary blip that presented a massive buying opportunity like  CNU. Time will tell which one it is.  :-\ 

Deletion confirmed.

Now let the games begin

https://app2.msci.com/eqb/gimi/stdindex/MSCI_Nov24_STPublicList.pdf

Quote from: entrep on Nov 07, 2024, 11:29 AMDeletion confirmed.

Now let the games begin

https://app2.msci.com/eqb/gimi/stdindex/MSCI_Nov24_STPublicList.pdf

All these index's and the shorting that goes on around dropping out of one and entering another, is above my pay grade. Is the SP going to go up or down? No-one really knows, but it sure as hell has nothing to do with Sparks value or performance in the long run. My strategy is just to ignore it all.

Quote from: LoungeLizard on Nov 07, 2024, 11:33 AMAll these index's and the shorting that goes on around dropping out of one and entering another, is above my pay grade. Is the SP going to go up or down? No-one really knows, but it sure as hell has nothing to do with Sparks value or performance in the long run. My strategy is just to ignore it all.

This is what is expected:

QuoteWhen Spark NZX is removed from the MSCI index, it often triggers a selloff as institutional investors and index-tracking funds, like ETFs, adjust their portfolios to reflect the index changes. Here's how the timeline for Spark NZX's exit may impact its stock price:

Announcement Date (November 6, 2024):
Following the official announcement, some investors might begin selling Spark NZX shares in anticipation of further declines. This initial response reflects expectations that index-tracking funds will be required to sell, potentially causing an early dip in the stock price.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this interval, gradual selloffs may occur as some investors preempt the index funds. However, the heaviest trading is unlikely until closer to the effective date, as index funds tend to rebalance their portfolios nearer the deadline.

Effective Date (November 26, 2024):
Significant selling pressure is anticipated around this date, as index-tracking funds need to exclude Spark NZX to align with the MSCI index changes. This concentrated rebalancing could lead to a notable decrease in the stock price.

In summary, while selling may start post-announcement, the highest volume and impact on Spark NZX's stock price is expected around the effective date (November 26, 2024). Other market dynamics may also affect the timing and scale of these movements.

Quote from: entrep on Nov 07, 2024, 12:08 PMThis is what is expected:

Hmmm - " a notable decrease in SP" around the index exclusion date. Really hard to believe given the 50% drop already priced in. Also, as noted on the other site, Spark and IFT are trading places in the MSCI Global Standard Index and the MSCI Global Small Cap Index, so it's hard to tell what the overall effect is on Sparks inclusion in Indexed funds. It's not as though they are dropping out altogether - looks a bit like of a reshuffling of the same pack of cards to me.
So far no change, but maybe at the end of the day. Or tomorrow. Or never.
 

Change takes effect at close of trade on 25 November. Lead up to that and especially the final 15 minute match price process could be an interesting opportunity to acquire more if you believe there is still some future spark left in Spark.
https://www.nzherald.co.nz/business/index-d-day-for-spark-analyst-says-its-stock-is-way-over-sold/C4OKKO3JHRHGBKDNTJDMAGWXJU/
Paywalled.

Infratil down 36c on the announcement it will join the MSCI Global Standard Index, Spark up a cent on dropping out. Hmmmm...

I reckon we should save reading the report card until after close of trade on 25 November as that's when the bulk of this change will occur.

Quote from: entrep on Nov 07, 2024, 12:08 PMWhen a stock is removed from an MSCI index, it often triggers a selloff because many institutional investors and funds that track the index (such as index funds or ETFs) are required to adjust their portfolios to mirror the changes. Here's how the timeline you provided could influence the stock's price movements:

Announcement Date (November 6, 2024):
Once the removal is officially announced, some investors may start selling the stock in anticipation of further drops, knowing that index-tracking funds will eventually be forced to sell. This could lead to an initial selloff as investors react to the news.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this period, you may see gradual selloffs by investors who want to get ahead of the index funds. However, it is unlikely to see the biggest volume of trades here because index-tracking funds typically make changes closer to the effective date.

Effective Date (November 26, 2024):
The heaviest selloff is often expected just before or on the effective date. This is because the index funds that track MSCI will need to rebalance their portfolios on or right before this date to exclude the stock from their holdings. This concentrated selling pressure could lead to the largest drop in the stock price.

In summary, while some selling may occur after the announcement, the biggest selloff is most likely to happen around the effective date (November 26, 2024). Keep in mind that other market factors can also influence the timing and extent of the selloff.

Like a good market analyst, ChatGPT says whatever sounds most plausible, and smugly makes predictions specific enough to be wrong most of the time.

Looking at the most recent MSCI Global Standard removals of NZ-based companies (all of which were demotions to Smallcap), only EBO suffered a significant price drop on removal. I'm guessing that was due to a lack of large institutional holders to make a market for the ETFs, and that SPK won't have this issue.

Interestingly, all of these had a small rally in the week following announcement. Kind of a 'sell the news' pattern, or rather buying the bad news. It'll be interesting to see if there's short (https://www.shortman.com.au/stock?q=Spk) covering during this time...

But after that, there's no obvious pattern for price movements. What is predictable, is huge volume on the day of removal. Expect around 150M shares to trade on the 25th, mostly at close, largely driven by ETFs offloading their excess holdings.

Sure, these index changes are a fantastic indicator of a big change in market cap, but unfortunately it's a trailing indicator.

(https://dl.imgdrop.io/file/aed8b140-8472-4813-922b-7ce35ef93c9e/2024/11/06/MSCI-Global-Standard-NZ-Removals-SPK-pending96b2166ffabc68a7.png)

Quotethere has been much discussion about how SPK has been a no growth company over the last 10 years. Well even if you add the market cap of CNU and SPK today it is less than the inflation adjusted Telecom list price of $11b (in todays dollars).

So we can actually say SPK is a no growth company for nearly 40 years? wow

Looking forward to seeing this trade on a fair no growth 'blue chip' P.E of 10. Which would give us say $2.22 sp

Interesting post from Rawz on the other channel.  I would add that analysts' expectations for FY25 are about 19 cps so you could quite reasonably say 10 x 19 = $1.90 is fair value for a no growth company.  Just as well data center investment will finally drive some eps growth...or can we be certain of that ?

Quote from: Basil on Nov 08, 2024, 12:18 PMInteresting post from Rawz on the other channel.  I would add that analysts' expectations for FY25 are about 19 cps so you could quite reasonably say 10 x 19 = $1.90 is fair value for a no growth company.  Just as well data center investment will finally drive some eps growth...or can we be certain of that ?

Are we saying then that for the last 40 years, the market valuation has been wrong? In the last ten years alone, the SP has been 2-3 times higher than what these calculations would suggest.
No growth calculations may be accurate as a technical exercise, but aren't always that helpful when translated into reality. To say that $1.90 is "fair" value for Spark, is basically saying they are un-investable, as the share price will never get that low. $1.90 ignores the weight of Sparks SP history, the high yield, and the assessment of all the agencies who say that fair value is around $4.

Quote from: LoungeLizard on Nov 08, 2024, 01:37 PMNo growth calculations may be accurate as a technical exercise, but aren't always that helpful when translated into reality. To say that $1.90 is "fair" value for Spark, is basically saying they are un-investable, as the share price will never get that low. $1.90 ignores the weight of Sparks SP history, the high yield, and the assessment of all the agencies who say that fair value is around $4.

I have no idea how analysts are arriving at $4+ because the way I value stocks gives a very different answer.  When there's a major disparity between my valuation screening process and analysts I always go with my methodology. In terms of the dividend yield, you have a point there as this is obviously supporting the current share price but for how long can a company making circa 18-19 cps keep paying out 25 cps especially when they have plans for a capital-intensive data center?

SPK up 10% from yearly low of $2.85 on Wed 30/10/24 at 10.02am. Very interesting with MSCI in 4 days.

Quote from: seaweed on Nov 18, 2024, 05:29 PMSPK up 10% from yearly low of $2.85 on Wed 30/10/24 at 10.02am. Very interesting with MSCI in 4 days.

Yep, and on high volume too. Can't all be retail. So why would institutions be buying if the SP is supposed to crash post-MSCI? And IFT - the supposed benefactor of the index change - has dropped from over $13 to $12.35. I suppose Trumps re-election might have something to do with that, but still...

Am wondering if the MSCI crowd have already started selling?

Quote from: seaweed on Nov 18, 2024, 05:29 PMSPK up 10% from yearly low of $2.85 on Wed 30/10/24 at 10.02am. Very interesting with MSCI in 4 days.

Hmm - I feel your pain. However - are you sure that this is how the start of an uptrend looks like?

SPK-long - Copy.JPG

Could be as well a quite weak consolidation prior to the next down leg? Just saying ...

Anyway - all the best to holders.

Quote from: bulltrap on Nov 07, 2024, 08:01 PMBut after that, there's no obvious pattern for price movements. What is predictable, is huge volume on the day of removal. Expect around 150M shares to trade on the 25th, mostly at close, largely driven by ETFs offloading their excess holdings.

SPK not so predictable as it turned out - 150M just at close, and 330M total for the day. That's more than twice previous exits, as a proportion of free float.

IFT in contrast turned over a very predictable 76M.

I suspect that SPK was heavily held in various special purpose funds, which were in addition to core index-linked holdings, but also conditional on MSCI World inclusion. Those would all have been sold.

The share price took a bit of a knock at close, and is down 3.4% day-on-day. That's also more than usual, although not as bad as EBO.

I wouldn't say SPK is out of the woods now. The lack of ongoing buy support from these funds is really going to hurt.

SPK has been 10c lower than today's close in recent weeks, so maybe the index fund sell-off was baked in. There might be a bit more residual selling tomorrow but now that the clever fund managers have sold at historic lows, we might see some normal trading patterns emerge.

Quote from: LoungeLizard on Nov 25, 2024, 05:52 PMSPK has been 10c lower than today's close in recent weeks, so maybe the index fund sell-off was baked in. There might be a bit more residual selling tomorrow but now that the clever fund managers have sold at historic lows, we might see some normal trading patterns emerge.

Spark (SPK) is one of those stocks that's kept getting cheaper through the year, now finding itself down a painful 43% year-to-date.

At the end of October they downgraded earnings guidance by ~3.5% and lowered their dividend guidance by 2.5cps to 25cps, putting it on a yield of over 9%.  The downgrade was a mixture of cyclical (shorter term) issues, and some that were more structural (longer term), both conspiring to hit margins and thus earnings. The cyclical part is what we think investors have not appreciated. i.e. SPK is owned as a defensive yield play, not a cyclical stock.

The broader issue to think about with SPK at the moment, is they remain committed to expanding into high tech and data centre sectors, but they don't have the funds to do it themselves, so they need a more aggressive capital management reset in our view. The other aspect worth highlighting is a move towards technology and data-centres will (proportionally) reduce it's exposure to core utility type earnings – not necessarily a bad thing but a change in their earnings profile none-the-less.

This transition won't be easy and could take 12-18 months to execute. As a positive reference, Singtel has re-rated by +30% in the last six months using a similar strategy. Asset sales would most likely need to happen to help fund the expansion, and we think they need to be more aggressive in cutting the dividend to align with their stated strategy.


Oz fundie commentary in the weekend 🤔

Am I reading this right. Did Milford Asset Management buy 96,039,988 shares in SPK on Monday 25/11/24 ???

Quote from: LoungeLizard on Nov 25, 2024, 05:52 PMSPK has been 10c lower than today's close in recent weeks, so maybe the index fund sell-off was baked in. There might be a bit more residual selling tomorrow but now that the clever fund managers have sold at historic lows, we might see some normal trading patterns emerge.

Quote from: seaweed on Nov 27, 2024, 10:31 AMAm I reading this right. Did Milford Asset Management buy 96,039,988 shares in SPK on Monday 25/11/24 ???

Clearly - Milford must be one of these clever fund managers LL mentioned? Oh no, they didn't sell, they bought  :o ;

Quite funny - the smartness of money (or its managers) seems to be fully correlated to the personal views of some omniscient poster. If the money does as the poster thinks, it is smart, and if it doesn't it is -  well, not that smart.

Quote from: BlackPeter on Nov 27, 2024, 10:57 AMClearly - Milford must be one of these clever fund managers LL mentioned? Oh no, they didn't sell, they bought  :o ;

Quite funny - the smartness of money (or its managers) seems to be fully correlated to the personal views of some omniscient poster. If the money does as the poster thinks, it is smart, and if it doesn't it is -  well, not that smart.

I don't think anyone really buys or sells based on what fund managers recommend, do they? Do your own research and follow your instincts is the basic rule. Sometimes that means going against the market, sometimes not.
In the case of Spark, I remain convinced they are victim of both the recessionary times and borderline market manipulation. The latter's effect will die away soon, the former, longer. But in any event, SPK are way undervalued (less than FBU - a loss making organisation the last time I checked).

disc. holder and buying more.

Great idea...just keep buying heavily in a downtrend...what could possibly go wrong lol

Quote from: Basil on Nov 27, 2024, 11:45 AMGreat idea...just keep buying heavily in a downtrend...what could possibly go wrong lol

I agree on not buying in a downtrend as a pretty hard and fast rule - but Spark is the exception that proves the rule, in my view.
Spark is different as there has been a certain amount of confection created by both shorting and index re-setting. The fundamentals though simply don't support nearly a 50% sell off. It is a defensive infrastructure stock with a (still) good yield providingng a service that is required in good times and bad (ie it is not cyclical). The sell-off just isn't supported by SPK'S history, market position, industry or indeed, it's own performance. 
I remain convinced that once the dust is settled people will start to realise just how ridiculous this selling-low mindset really was. 

I'm going to stick with my gold standard valuation methodology that has served me so well for more than a decade, derived from Ben Graham's valuation criteria that a no growth company is worth no more than a PE of 10.  Using that benchmark has helped me successfully navigate all sorts of trouble over the years.  There's a long-proven history as articulated best by Ferg, that this company cannot grow eps and is stuck averaging about 22 cps over the last decade, and I note too that eps is forecast to be lower than that over the next few years.  Obviously, I am deeply skeptical that building and funding, (not sure how they are going to fund it?) a data center is going to be meaningfully eps accretive, but who knows, predicting the future is far from an exact science and I certainly got a lesson, (thankfully a free one), on that this year with Heartland, so fair enough LL and I wish you good luck with it.

Quote from: Basil on Nov 27, 2024, 12:57 PMI'm going to stick with my gold standard valuation methodology that has served me so well for more than a decade, derived from Ben Graham's valuation criteria that a no growth company is worth no more than a PE of 10.  Using that benchmark has helped me successfully navigate all sorts of trouble over the years.  There's a long-proven history as articulated best by Ferg, that this company cannot grow eps and is stuck averaging about 22 cps over the last decade, and I note too that eps is forecast to be lower than that over the next few years.  Obviously, I am deeply skeptical that building and funding, (not sure how they are going to fund it?) a data center is going to be meaningfully eps accretive, but who knows, predicting the future is far from an exact science and I certainly got a lesson, (thankfully a free one), on that this year with Heartland, so fair enough LL and I wish you good luck with it.

Cheers, Basil. This isn't an exact science and we all to some extent have to back our instincts. My instincts tell me this valuation of Spark is completely wrong, historically and looking forward.
 
I get your "no growth" metrics but that's too blunt an instrument in my view. It's a good guide that serves most investors most of the time, but market leading infrastructure/utility stocks can't be judged by the same metrics as say, retail business's. They demand a premium because of their position in the very safe, non-cyclical market they operate in. If they pay a very good dividend (which Spark has, and will continue to do so) then that also is a factor to consider, beyond the "no growth" mantra.
Let's see how this turns out. IFT and SPK are my biggest stocks (IFT the biggest) so in some ways there's a bit of a hedge there. I'm backing that both will follow their very long historical paths of being very good investment stocks to have in one's portfolio.

Quote from: LoungeLizard on Nov 27, 2024, 01:37 PMCheers, Basil. This isn't an exact science and we all to some extent have to back our instincts. My instincts tell me this valuation of Spark is completely wrong, historically and looking forward.
 
I get your "no growth" metrics but that's too blunt an instrument in my view. It's a good guide that serves most investors most of the time, but market leading infrastructure/utility stocks can't be judged by the same metrics as say, retail business's. They demand a premium because of their position in the very safe, non-cyclical market they operate in. If they pay a very good dividend (which Spark has, and will continue to do so) then that also is a factor to consider, beyond the "no growth" mantra.
Let's see how this turns out. IFT and SPK are my biggest stocks (IFT the biggest) so in some ways there's a bit of a hedge there. I'm backing that both will follow their very long historical paths of being very good investment stocks to have in one's portfolio.

Ever wondered, whether Spark is really an infrastructure stock? Chorus, yes - they own most of the fibre, but Spark? Spark is at best one in a happy threesome (Spark, One and 2 degrees) of Telecom utilities with some other minors thrown in. Remove Spark and nobody will really notice a difference ... everybody else is able to provide the same lousy service. No monopoly, no moat - so, why would the market pay a monopoly premium?

I recon that's what the market noticed as well, and Basils (or Grahams) formula makes a lot of sense in this context. Obviously, you can always hope for that the market quickly unlearning, what it just noticed, but despite some market participants being quite average ... not sure, I would put money on them forgetting this lesson so soon.

But anyway - I have no money in Spark (though they might be a minnow in one of my funds) - i.e. I don't care. Good luck to holders - and lets hope IFT isn't doing at some stage a Spark on you.

Quote from: BlackPeter on Nov 27, 2024, 05:17 PMEver wondered, whether Spark is really an infrastructure stock? Chorus, yes - they own most of the fibre, but Spark? Spark is at best one in a happy threesome (Spark, One and 2 degrees) of Telecom utilities with some other minors thrown in. Remove Spark and nobody will really notice a difference ... everybody else is able to provide the same lousy service. No monopoly, no moat - so, why would the market pay a monopoly premium?

I recon that's what the market noticed as well, and Basils (or Grahams) formula makes a lot of sense in this context. Obviously, you can always hope for that the market quickly unlearning, what it just noticed, but despite some market participants being quite average ... not sure, I would put money on them forgetting this lesson so soon.

But anyway - I have no money in Spark (though they might be a minnow in one of my funds) - i.e. I don't care. Good luck to holders - and lets hope IFT isn't doing at some stage a Spark on you.

Well I suppose Spark are a mixture of a utility and infrastructure stock. They own several datacentres (and are expanding), part-own Sothern Cross international cable, and they do actually own fibre as well, not the door-to-the-door type like Chorus, but what I believe is called the "back-haul" fibre network between the major centres.

 That, together with their IT Services, cloud technology etc sets them apart from One NZ and 2Degrees. They don't have a monopoly in any of these individual areas, but no-one else comes near to providing the range of services that Spark offer. That's why, to just dismiss them as a regular "no growth company" is a bit simplistic in my view.

Craig's latest note on SPK.

SPK – Spark is now out of the MSCI but that hasn't stopped the share price slide with the stock closing on a new low of $2.86 yesterday ... we couldn't help but reflect on Tim Hunter's NBR article last month discussing whether SPK has shot itself in the foot ... if SPK were to have a second "reset" of its dividend to a more 'affordable' level of circa 18-20cps then the stock would be trading on a minimum 6.2% net yield, the question then is does that make the stock cheap when there has been close to zero EBITDA growth for a decade? It's interesting to look back on past research notes .... In FY13 SPK EBITDA was c$1.043B, the bottom end of SPK's guidance for the current FY25 year is $1.120B an increase of 7% in 12 years. Even more interesting is that a decade ago SPK's share price was $3.15 and 1 Yr Fwd DPS was 19cps putting the stock on a net yield of 6% at the time....from an historical perspective perhaps SPK is not so cheap after all despite its c45% share price fall this year from a high of $5.40 to the current $2.86.

Quote from: Mos on Dec 03, 2024, 06:35 PMCraig's latest note on SPK.

SPK – Spark is now out of the MSCI but that hasn't stopped the share price slide with the stock closing on a new low of $2.86 yesterday ... we couldn't help but reflect on Tim Hunter's NBR article last month discussing whether SPK has shot itself in the foot ... if SPK were to have a second "reset" of its dividend to a more 'affordable' level of circa 18-20cps then the stock would be trading on a minimum 6.2% net yield, the question then is does that make the stock cheap when there has been close to zero EBITDA growth for a decade? It's interesting to look back on past research notes .... In FY13 SPK EBITDA was c$1.043B, the bottom end of SPK's guidance for the current FY25 year is $1.120B an increase of 7% in 12 years. Even more interesting is that a decade ago SPK's share price was $3.15 and 1 Yr Fwd DPS was 19cps putting the stock on a net yield of 6% at the time....from an historical perspective perhaps SPK is not so cheap after all despite its c45% share price fall this year from a high of $5.40 to the current $2.86.

Good points Mos and agree on just about all of what you said. The low for the year was $2.85c and that was my doing on 30/10/24 at 10.02 am and 5 mins later was back to 2.89 and closed that day at $3.00. The real low for that day would of been 2.89 if I hadn't sold 20,000 at 10.02. I am still waiting for it to go down to 2.20 or so as people on here have been saying. At what price would it interest you to buy into SPK. 

Quote from: Mos on Dec 03, 2024, 06:35 PMCraig's latest note on SPK.

SPK – Spark is now out of the MSCI but that hasn't stopped the share price slide with the stock closing on a new low of $2.86 yesterday ... we couldn't help but reflect on Tim Hunter's NBR article last month discussing whether SPK has shot itself in the foot ... if SPK were to have a second "reset" of its dividend to a more 'affordable' level of circa 18-20cps then the stock would be trading on a minimum 6.2% net yield, the question then is does that make the stock cheap when there has been close to zero EBITDA growth for a decade? It's interesting to look back on past research notes .... In FY13 SPK EBITDA was c$1.043B, the bottom end of SPK's guidance for the current FY25 year is $1.120B an increase of 7% in 12 years. Even more interesting is that a decade ago SPK's share price was $3.15 and 1 Yr Fwd DPS was 19cps putting the stock on a net yield of 6% at the time....from an historical perspective perhaps SPK is not so cheap after all despite its c45% share price fall this year from a high of $5.40 to the current $2.86.

Strange commentary. Craigs can't seem to decide whether to evaluate Spark as a growth or yield stock, when it's clear that SPK has been the latter for donkeys years. The answer to its own question of whether a further cut dividend to 18-20c (I don't think it will go that low), representing a 6.2% NET yield, would make the stock cheap is - yes, absolutely. I'll take that yield whilst Spark gets its house in order and the data centre investments starts to pay off.

Craigs then change tack and talk about EBITDA growth over the last ten years. Is that really that relevant for a stock that has delivered a solid yield over that period? It delivered a 6% NET yield 10 years ago (when interest rates were 3.5%), and even if the dividend is cut further (which it may or not be) the yield would, as Craigs say, be 6.2% net. A pretty solid yield over a sustained period because IT"S A YIELD STOCK.

I also note, that even though the ratings agencies have jumped a bit on the MSCI bandwagon, the average target SP for SPARK is still around $4. Sounds to me that even they don't believe their own story.

Quote from: LoungeLizard on Dec 04, 2024, 10:24 AMI alos note, that even though the ratings agencies have jumped a bit on the MSCI bandwagon, the average target SP for SPARK is still around $4. Sounds to me that even they don't believe their own story.

Funny post.

I assume you realize that Rating Agencies have absolutely nothing to do with making up target prices? Latter is what some brave stock market analysts do who don't have enough investment skills to live off those.

While its not unheard of that Rating agencies get the credit rating wrong, there is still some statistical relevant correlation between their rating and the survival of the rated security.

Target prices however are always statistically irrelevant - and neither produced by rating agencies.

Quote from: BlackPeter on Dec 04, 2024, 11:08 AMFunny post.

I assume you realize that Rating Agencies have absolutely nothing to do with making up target prices? Latter is what some brave stock market analysts do who don't have enough investment skills to live off those.

While its not unheard of that Rating agencies get the credit rating wrong, there is still some statistical relevant correlation between their rating and the survival of the assessed security.

Target prices however are always statistically irrelevant - and neither produced by rating agencies.

Just my use of the term there BP. I'm referring to business's like Craigs that do have target share prices, based on their analysis. What I was trying to say is that there is a disconnect between their doom and gloom analysis and their projected SP for Spark.

Quote from: LoungeLizard on Dec 04, 2024, 11:17 AMJust my use of the term there BP. I'm referring to business's like Craigs that do have target share prices, based on their analysis. What I was trying to say is that there is a disconnect between their doom and gloom analysis and their projected SP for Spark.

Absolutely - however, if you widen your analysis, you will find many stocks where target prices make no sense at all (e.g. if you compare them with the buy recommendation). Target prices are published for entertainment value, not for being correct or for making sense.

Using them as argument is like investing based on your weekly horoscope in the newspaper. You know, that horoscopes are pure fiction, don't you? Same with target prices. Sure - most are created by some model, but all these models require input describing the future which nobody knows. Garbage in - garbage out. But yes, some analysts put at least the effort in to align buy recommendation and target prices, but not everybody is as diligent - and lets face it, even if the recommendation is consistent, it won't make it right or at least statistically relevant.

Quote from: BlackPeter on Dec 04, 2024, 11:30 AMAbsolutely - however, if you widen your analysis, you will find many stocks where target prices make no sense at all (e.g. if you compare them with the buy recommendation). Target prices are published for entertainment value, not for being correct or for making sense.

Using them as argument is like investing based on your weekly horoscope in the newspaper. You know, that horoscopes are pure fiction, don't you? Same with target prices. Sure - most are created by some model, but all these models require input describing the future which nobody knows. Garbage in - garbage out. But yes, some analysts put at least the effort in to align buy recommendation and target prices, but not everybody is as diligent - and lets face it, even if the recommendation is consistent, it won't make it right or at least statistically relevant.

You're missing my point. I'm not defending Craigs or any of their ilk. Quite the reverse. That's why I highlight the obvious inconsistency in their "analysis" which seems to suggest that SPK could/should go lower and yet they maintain a $4 target. Which is correct the analysis or the conclusion?

I'm on record as saying that these institutions are too closely linked to the industry they are commentating on. I'd also agree that historically they have a worse record in picking stocks than say, flipping a coin. So why do so many, otherwise intelligent people, quote them as if they have any greater insight than anyone else? Beats me. All I can come up with is a confirmation bias for a decision already made. 

Quote from: LoungeLizard on Dec 04, 2024, 11:59 AMYou're missing my point. I'm not defending Craigs or any of their ilk. Quite the reverse. That's why I highlight the obvious inconsistency in their "analysis" which seems to suggest that SPK could/should go lower and yet they maintain a $4 target. Which is correct the analysis or the conclusion?

Looks like we are agreeing on the relevance of target prices. And this was my point. Given that they are point- and meaningless, there is no point either to use them as argument - which it appeared you do. So- clearly, if they don't mean anything, we can't use them as argument that the stock in undervalued, can we?

So, maybe we better find something else to justify a higher stock price.

Typical candidates would be

a) future earnings potential, but let's face it ... Sparks PE is still overstretched - if I take the sell of the cellphone towers out of the equation, their annual average earnings is around 20 cents. What would this justify - a SP of $2?

b) earnings growth potential. Always good for a great story and amazing hype peaks, but with Spark - lets face it, they didn't had any earnings growth in the last decade (probably longer, but this is as far as my records reach), they are even dropping after the one off sale of the family silver (Cell phone towers). So why should the market price growth instead of following the earnings?

c) NTA - well, last time i checked it was 41 cents per share, i.e. clearly nothing enticing the market to lift the SP. They basically have nothing valuable left which still could be sold

d) an amazing story creating a hype bubble ... and to a degree it seems this has worked for some investors. The minnow Spark is now building some data centers, same as Amazon, Microsoft, Google, Meta and some 250 other mainly global providers did before them. Great idea! As we all know, if a large number of competitors is running in front of you, you are going to win and take all the cream, isn't this the rule of free markets? Well, looks like some investors seem to assume that related to Spark.

For some reason I have problems with this get rich quick story, but hey, if it works for others.

Any other reason you could think of why the market should re-rate Spark's valuation?

Quote from: LoungeLizard on Dec 04, 2024, 11:59 AMI'm on record as saying that these institutions are too closely linked to the industry they are commentating on. I'd also agree that historically they have a worse record in picking stocks than say, flipping a coin. So why do so many, otherwise intelligent people, quote them as if they have any greater insight than anyone else? Beats me. All I can come up with is a confirmation bias for a decision already made. 

You well might be on the right track re conformation bias. Might be worthwhile to think that through ...

Quote from: BlackPeter on Dec 04, 2024, 02:46 PMLooks like we are agreeing on the relevance of target prices. And this was my point. Given that they are point- and meaningless, there is no point either to use them as argument - which it appeared you do. So- clearly, if they don't mean anything, we can't use them as argument that the stock in undervalued, can we?

So, maybe we better find something else to justify a higher stock price.

Typical candidates would be

a) future earnings potential, but let's face it ... Sparks PE is still overstretched - if I take the sell of the cellphone towers out of the equation, their annual average earnings is around 20 cents. What would this justify - a SP of $2?

b) earnings growth potential. Always good for a great story and amazing hype peaks, but with Spark - lets face it, they didn't had any earnings growth in the last decade (probably longer, but this is as far as my records reach), they are even dropping after the one off sale of the family silver (Cell phone towers). So why should the market price growth instead of following the earnings?

c) NTA - well, last time i checked it was 41 cents per share, i.e. clearly nothing enticing the market to lift the SP. They basically have nothing valuable left which still could be sold

d) an amazing story creating a hype bubble ... and to a degree it seems this has worked for some investors. The minnow Spark is now building some data centers, same as Amazon, Microsoft, Google, Meta and some 250 other mainly global providers did before them. Great idea! As we all know, if a large number of competitors is running in front of you, you are going to win and take all the cream, isn't this the rule of free markets? Well, looks like some investors seem to assume that related to Spark.

For some reason I have problems with this get rich quick story, but hey, if it works for others.

Any other reason you could think of why the market should re-rate Spark's valuation?

You well might be on the right track re conformation bias. Might be worthwhile to think that through ...

I'll try again. I'm not making the point that Craigs or any of these investment houses are inherently more correct in their SP forecasts than anyone else. For Spark or any other company. I'm NOT using their analysis or predictions as a basis of why I think SPK has been oversold. Any bias I have is against these sort of pronouncements, not for.

I was trying to point out that if you are going to quote these institutions "analysis" as some sort of basis to follow - as the original poster appeared to do - then you've got to follow it through. You can't accept the rather shonky assertion that SPK are perhaps OVERVALUED, and then ignore the fact that these same institutions, at the end of the day, after all their analysis and criticism, still come up with a $4 SP. You can't cherry pick the negative analysis and throw out the target price. It's either both or none. I vote for none.

There are better number crunchers than me that have drilled down into Sparks accounts and have provided what seems - to me anyway - compelling evidence that Spark is in better shape than what some would think. Snoopy on the other site, has gone into a lot of detail, which I'm sure you've read (and probably disagree with).

The overselling is, to put it mildly, a historical anomaly. Some negative reaction to an underwhelming set of results and guidance, is appropriate, but 45%? Some people like to say that with the future being anyone's guess, then the past is our best indicator. Hang on, I think that might have been you? Sparks past - the SP, dividend history, and relative stability (until now) - doesn't sit well with the current negativity and volatility, some of which was manufactured by shorters and short-term index traders. All of this will come to pass.

 I still see value in Spark as a solidly defensive stock in a number of essential industries that has a long, and on-going history of paying a good yield. Is the current yield sustainable? Maybe, maybe not. At the moment, with the country being in the grip of an austerity minded Government that is leading us boldly into recession, Sparks "discretionary" sources of income - mobile, cloud, consultancy - is under pressure. They are also spending money on broadening their income into data-centres, which I think is the right thing to do, but is too soon to bear fruit.

But whatever the reason for the SP dip, its severity doesn't look or feel right to me, partly for historical reasons and partly because I think a lot of the current problems are temporary and will, in time, be corrected. That might require the wider economy to improve first, but in the meantime I'm happy to bank the (current) 8.6% dividend.

If one looks to fundamentals only, would anyone think that FBU are worth more than Spark right now? FBU who made a 227m Net LOSS and haven't paid dividend since the middle of last year are worth more than Spark who made a 316m PROFIT and paid a 27.5c dividend? Of course not, yet that is how the market sees it. I realise I'm swimming against the tide here, but I remain convinced that the market is badly wrong and at some point - sooner or later - there will be a significant favourable re-rating.   
 

Quote from: LoungeLizard on Dec 04, 2024, 04:23 PMI'll try again. I'm not making the point that Craigs or any of these investment houses are inherently more correct in their SP forecasts than anyone else. For Spark or any other company. I'm NOT using their analysis or predictions as a basis of why I think SPK has been oversold. Any bias I have is against these sort of pronouncements, not for.

I was trying to point out that if you are going to quote these institutions "analysis" as some sort of basis to follow - as the original poster appeared to do - then you've got to follow it through. You can't accept the rather shonky assertion that SPK are perhaps OVERVALUED, and then ignore the fact that these same institutions, at the end of the day, after all their analysis and criticism, still come up with a $4 SP. You can't cherry pick the negative analysis and throw out the target price. It's either both or none. I vote for none.

There are better number crunchers than me that have drilled down into Sparks accounts and have provided what seems - to me anyway - compelling evidence that Spark is in better shape than what some would think. Snoopy on the other site, has gone into a lot of detail, which I'm sure you've read (and probably disagree with).

The overselling is, to put it mildly, a historical anomaly. Some negative reaction to an underwhelming set of results and guidance, is appropriate, but 45%? Some people like to say that with the future being anyone's guess, then the past is our best indicator. Hang on, I think that might have been you? Sparks past - the SP, dividend history, and relative stability (until now) - doesn't sit well with the current negativity and volatility, some of which was manufactured by shorters and short-term index traders. All of this will come to pass.

 I still see value in Spark as a solidly defensive stock in a number of essential industries that has a long, and on-going history of paying a good yield. Is the current yield sustainable? Maybe, maybe not. At the moment, with the country being in the grip of an austerity minded Government that is leading us boldly into recession, Sparks "discretionary" sources of income - mobile, cloud, consultancy - is under pressure. They are also spending money on broadening their income into data-centres, which I think is the right thing to do, but is too soon to bear fruit.

But whatever the reason for the SP dip, its severity doesn't look or feel right to me, partly for historical reasons and partly because I think a lot of the current problems are temporary and will, in time, be corrected. That might require the wider economy to improve first, but in the meantime I'm happy to bank the (current) 8.6% dividend.

If one looks to fundamentals only, would anyone think that FBU are worth more than Spark right now? FBU who made a 227m Net LOSS and haven't paid dividend since the middle of last year are worth more than Spark who made a 316m PROFIT and paid a 27.5c dividend? Of course not, yet that is how the market sees it. I realise I'm swimming against the tide here, but I remain convinced that the market is badly wrong and at some point - sooner or later - there will be a significant favourable re-rating.   
 

Mmh - must be tough to find a stock which makes Spark look good, but yes - you did it (FBU).

Just to clarify, I would at current see both of them at current prices as high risk investment, though Spark might have a more solid base line, while for FBU I see higher risks but as well more potential if everything works out (but when does that happen?). But this is for a different thread.

I'd think though that for most investors its not about finding only the second worst investment and being happy with it, but finding one which is actually good. I'd currently count neither Spark nor FBU in this category ...

While it appears that we flogged the horse of unreliable target prices enough for this argument - you still didn't give us one good reason why Spark stock prices should go up again. The fact that the market did overate them for some time in the past does not really count (market has this habit of wrongly pricing stocks - just look what it gave at some stages for duds like RYM, SML or A2M - just ridiculous). Market clearly can be clueless for extended periods of time.

BTW: Using the past as the best guide for the future is one of Basils standard statements. In some situations (e.g. when trying to forecast peoples behaviour) would I agree that the past might be a useful (though rarely a good) guide. In many situations however I strongly disagree with this statement.

Quote from: BlackPeter on Dec 04, 2024, 04:55 PMMarket clearly can be clueless for extended periods of time.

Well, you got that right.

See Milford Asset Management are a buyer of the stock by today disclosure notice over the period from 26 Nov to 11 Dec 2024.

Quote from: Otago K on Dec 13, 2024, 10:14 AMSee Milford Asset Management are a buyer of the stock by today disclosure notice over the period from 26 Nov to 11 Dec 2024.

Yep, they've been buying up big recently. Now that the index machinations have been played out, they're sitting pretty. SP moving up to $3 now. Breaking news! - Analysts now say that SPK may have been oversold ;)   

https://archive.is/2024.12.12-214338/https://www.theaustralian.com.au/business/dataroom/spark-of-interest-in-acquisition-flickers-out-for-telstra/news-story/03630a30ceeb8be3a8fe4d14ea3a72e7?amp&nk=c5e0751d3fea9206347b4e8040ec53dc-1734039837

"more likely is a focus on its plan to sell down its data centre interests. It is understood the data centres were more capital-intensive than anticipated"

LOL.  

Quote from: KW on Dec 16, 2024, 12:16 PM"more likely is a focus on its plan to sell down its data centre interests. It is understood the data centres were more capital-intensive than anticipated"

LOL. 

Reads more like a speculative piece. No mention of a source for the comments about selling fibre or data centre assets. Could be true but Sparks latest comments indicate they want to "support our development pipeline, and we are currently exploring capital partnerships to achieve this."

That sounds to me that they are looking, belatedly perhaps, to bringing other investors on board, rather than selling the assets themselves.

Quote from: Otago K on Dec 13, 2024, 10:14 AMSee Milford Asset Management are a buyer of the stock by today disclosure notice over the period from 26 Nov to 11 Dec 2024.

Looks like Firstcape Group LTD. are also sniffing around at 92,000,000+ yesterdays announcement and Milford a few days ago. Looks like some of these sniffers are getting in early to try and price match LoungeLizard and myself in case sp doesn't fall as low as some are saying lol. 

All quiet around here lately. 6 weeks quiet. Was thinking of buying some IFT but couldn't help myself and bought more SPK. Food for thought...10,000 IFT with 20c div would get me $2000 div. and cost about $110,000 @ $11 per share, in a slight down trend in last 2 months. So I bought more SPK instead...$110,000 = 37,931 shares @ $2.90 per share and 25c div. which gives me a $9,482.75c div. The sp is in a holding pattern last 3 months but have noticed an ever so slight uptrend in last 7 weeks. But the 37,000 odd shares is but a little top up for the next div payout. Thank you that is all I want to say until next time. Have a good day and a dancing I shall go. seaweed

Latest results are looking like market opens down 20c. edit in about 3 minutes it re rated to down more like 42c.

Ouch - not a good result.

https://www.nzx.com/announcements/447132

Guidance for current fiscal year has been reduced again.  I don't buy into EBITDAI given depreciation, amort and interest costs result from genuine cash outflows for SPK.

Half year sales down 1.9%, NPAT of $35m down 77%.

Dividend is unchanged which surprises me.....SPK saying funds from sale of remaining Connexa holding will help with cashflow.

Mobile business has lost market share (as expected per an earlier post) and SPK acknowledge broadband is a mature market.  Product life cycle graphs suggest SPK has passed peak profitability for broadband.  Other ventures are not delivering enough profit fast enough to offset the decline.  SPK are also seeking a partner for data centre expansion - that's what happens when borrowings are used to pay dividends instead of growing the business.....

SP savaged on opening this morning at $2.51 (down from $2.93 yesterday).  IMO the 2 years for a market re-rate has just been reset.  No rush to for a contrarian buy.....yet.

Many thanks for your detailed work Ferg showing this is a no growth company which has been paying far more in dividends than it can afford.

Unfortunately, many have been suckered into this dividend trap and lead down the garden path thinking their data center plans would be the panacea for all the companies' problems.

If you take the average eps for the last 10 years of ~ 20 cents and apply a no growth PE of 8.5 to that I still see fair value as south of $2.

Good grief there isn't much on the NZR worth investing in. 

SP where it was 11 years ago, thats not an investment, that just a place to park spare money........

SPK_2025-02-21_13-11-50~2.png

Yes but many stocks on the NZX have gone no where in the last 2 decades...

but dont worry the corporate tax rate will be cut and it will be off the to races again...

till the next government increases to 39 cents..

https://www.nzherald.co.nz/business/spark-sees-sharp-drop-in-first-half-profit-warns-on-full-year/35BEUS722ZFFZPV7B3G2XGGPEY/

Quote from: Dolcile on Feb 21, 2025, 10:59 AMGood grief there isn't much on the NZR worth investing in. 

Agree, most people in my age bracket and younger are just putting their money in US ETFs.

20% down! Getting into way-oversold territory (again). Pull-back in the days to come.

Quote from: Basil on Feb 21, 2025, 10:39 AMMany thanks for your detailed work Ferg showing this is a no growth company which has been paying far more in dividends than it can afford.

Unfortunately, many have been suckered into this dividend trap and lead down the garden path thinking their data center plans would be the panacea for all the companies' problems.

If you take the average eps for the last 10 years of ~ 20 cents and apply a no growth PE of 8.5 to that I still see fair value as south of $2.

Look at the massive amounts of cash Spark has spent on growth capex over the last few years only to have revenue decline massively in real terms and I think you'll agree applying a 8.5 P/E is way too generous.

That is a great way of looking at the lack of growth in revenue. Since 2016 Spark spend more than $2b NET on capital expenditure. That is >$2b spend compared to assets sold for no obvious gains by my calculations.

Quote from: Stockgathering on Feb 21, 2025, 04:24 PMThat is a great way of looking at the lack of growth in revenue. Since 2016 Spark spend more than $2b NET on capital expenditure. That is >$2b spend compared to assets sold for no obvious gains by my calculations.

Indeed - your calculations are correct.  SPK put up a table in today's release that shows maintenance vs growth capex - the majority of capex is for maintaining the asset base.  This is important IMO for calculating free cash flow - maintenance capex should definitely be part of the calculation.  And as you have noted, the values spent on (growth and/or all) capex have not resulted in an increased EPS for SPK over the past 10 years.

Debts are now at an all time high of $1.86b.

I feel for current shareholders given today was brutal.  In other news I see ACC unloaded 550k shares yesterday (https://api.nzx.com/public/announcement/447206/attachment/438066/447206-438066.pdf) which puts them below 5%.

QuoteQuote from: LoungeLizard on Nov 08, 2024, 01:37 PM
No growth calculations may be accurate as a technical exercise, but aren't always that helpful when translated into reality. To say that $1.90 is "fair" value for Spark, is basically saying they are un-investable, as the share price will never get that low. $1.90 ignores the weight of Sparks SP history, the high yield, and the assessment of all the agencies who say that fair value is around $4.

Basil
I have no idea how analysts are arriving at $4+ because the way I value stocks gives a very different answer.  When there's a major disparity between my valuation screening process and analysts I always go with my methodology. In terms of the dividend yield, you have a point there as this is obviously supporting the current share price but for how long can a company making circa 18-19 cps keep paying out 25 cps especially when they have plans for a capital-intensive data center?

We'll see LL, I reckon $1.90 is on the cards now or even lower.  Blind faith in average analyst forecasts is never a good idea.  You need to understand the assumptions they are putting into their DCF valuation models.  The old garbage in, garbage out rule applies if the assumptions behind their model are fundamentally flawed.  I feel blessed to have the skills to value these no growth companies for myself.  I see there's that major dividend reset coming later this year that I also forewarned about.

Quote from: Basil on Feb 21, 2025, 07:09 PMWe'll see LL, I reckon $1.90 is on the cards now or even lower.  Blind faith in average analyst forecasts is never a good idea.  You need to understand the assumptions they are putting into their DCF valuation models.  The old garbage in, garbage out rule applies if the assumptions behind their model are fundamentally flawed.  I feel blessed to have the skills to value these no growth companies for myself.  I see there's that major dividend reset coming later this year that I also forewarned about.

As I've said ad naseum I have no faith, blind or otherwise, in analysts SP valuations. In fact it is you, that has the tendency to quote analysts when it suits, and to reject them when it doesn't.

As for $1.90 - well, we'll see shall we? I don't think it will get anywhere near that and is more likely to rebound.

TBH, I tire of your self congratulatory missives, Basil. We all invest in stocks for different reasons, timeframes and risk appetite. It is clear you don't like stocks like IFT/SPK/AIA or indeed almost any stock that you would classify as "no growth." Yet they form the backbone of any balanced portfolio. The key word being balanced.

Quote from: LoungeLizard on Feb 21, 2025, 09:53 PMAs I've said ad naseum I have no faith, blind or otherwise, in analysts SP valuations. In fact it is you, that has the tendency to quote analysts when it suits, and to reject them when it doesn't.

I read their reports and see if I agree with the underlying assumptions behind their DCF valuations.  The validity of their DCF valuations is only as good as the validity of their underlying assumptions that go into their valuation model.  The quality of work varies a lot.

Quote from: LoungeLizard on Feb 21, 2025, 09:53 PMAs for $1.90 - well, we'll see shall we? I don't think it will get anywhere near that and is more likely to rebound.

I have a lot of respect for Ferg's abilities as an experienced accountant.  I don't need to expand upon his work, but it seems crystal clear to me there's no growth here.  You see it otherwise and good luck with that.

Quote from: LoungeLizard on Feb 21, 2025, 09:53 PMTBH, I tire of your self congratulatory missives, Basil.

Feel free to put me on ignore if you no longer value my input on here, (same applies to anyone else who feels that way).

Quote from: LoungeLizard on Feb 21, 2025, 09:53 PMWe all invest in stocks for different reasons, timeframes and risk appetite. It is clear you don't like stocks like IFT/SPK/AIA or indeed almost any stock that you would classify as "no growth." Yet they form the backbone of any balanced portfolio. The key word being balanced.

It might surprise you to know I have ~ half of my portfolio invested with professional fund managers.  Matt Peek of Kingfish has done a good job over the years or sorting the Wheat from the Chaff and successfully avoided long term value destruction companies like SPK, OCA, and FBU to name just three.  Kingfish have plenty of AIA and IFT in their portfolio and I have plenty of kingfish shares bought at a ~ 10% discount to NTA.   I have no need to replicate their holdings in my own portfolio. I'll leave you in peace to lick your wounds now.

Quote from: Basil on Feb 23, 2025, 12:50 PMI read their reports and see if I agree with the underlying assumptions behind their DCF valuations.  The validity of their DCF valuations is only as good as the validity of their underlying assumptions that go into their valuation model.  The quality of work varies a lot.I have a lot of respect for Ferg's abilities as an experienced accountant.  I don't need to expand upon his work, but it seems crystal clear to me there's no growth here.  You see it otherwise and good luck with that.  Feel free to put me on ignore if you no longer value my input on here, (same applies to anyone else who feels that way).It might surprise you to know I have ~ half of my portfolio invested with professional fund managers.  Matt Peek of Kingfish has done a good job over the years or sorting the Wheat from the Chaff and successfully avoided long term value destruction companies like SPK, OCA, and FBU to name just three.  Kingfish have plenty of AIA and IFT in their portfolio and I have plenty of kingfish shares bought at a ~ 10% discount to NTA.   I have no need to replicate their holdings in my own portfolio. I'll leave you in peace to lick your wounds now.

My underlying comment is this. You have your methods of investing and you are happy with the results - as you keep telling everyone. If you are happy with KFL's total gross return for the last 5 years of 7.8% then fine- you're easy pleased.

My approach to investing is different and very simple - apportion funds over all the major players in all our major industries, including SPK, and keep holding, even when those industries may be struggling. I make some adjustments, up or down, but, but esentially I am in it for the long run.  At any one time there are stocks that are doing well IFT, FPH - and occasionally the odd one that is not - SPK. That is not unlike any fund I would imagine. What I have seen over the last 15 years is that as long as you don't put too much in any one stock, then over time, these blue chip companies will perform better, and require less micro management than small cap stocks. My average return over the last 10 years has been 11.9%. Thats not a boast - I am quite sure many have done much better. But my point is Basil -this is not a competition. I am happy with my approach and you are happy with yours. End of story.

As far as Spark are concerned, the other lesson I have learnt is to not to lose one's head, even when those around you are losing theirs. Virtually all the major stocks have had periods of decline or statis, although admittedly not to the degree that SPK has. But because they are the major players in an essential industry, the tendency is for them to recover. The good thing about SPK is that during this period the return will still be better than most stocks, including managed funds. SPK is clearly in a difficult period but I remain convinced that it is radically oversold and its forward PE and SP bears no relation to other telcos in oceania. If in 2-3 years there has not been a substantial recovery then quite frankly, I would be amazed.

Quote from: LoungeLizard on Feb 23, 2025, 01:25 PMIf you are happy with KFL's total gross return for the last 5 years of 7.8% then fine- you're easy pleased.

Their return since inception has been just over 10%.  The last 5 years as you know with Covid and the very lengthy recession have been extremely challenging for the NZX market nevertheless they have outperformed over that period quite considerably relative to the NZX50. Mostly I do my own stock picking on the NZX but for the KFL 12% portfolio allocation I have with them, I would be satisfied if over the long term they continued to earn 10%.

Quote from: LoungeLizard on Feb 23, 2025, 01:25 PMI am happy with my approach and you are happy with yours. End of story.

Fair enough.    Approaching retirement, I am mostly interested in yield these days and GARP stocks that pay decent yield. Everyone has different goals, I get that. I think the main purpose for me commenting on this one is the risks around that yield, but Ferg has done a better job of articulating that and indeed, the board themselves have now said their future dividends are subject to review so there's no need for any further barking from me on this one. 

Quote from: Basil on Feb 23, 2025, 03:40 PMTheir return since inception has been just over 10%.  The last 5 years as you know with Covid and the very lengthy recession have been extremely challenging for the NZX market nevertheless they have outperformed over that period quite considerably relative to the NZX50. Mostly I do my own stock picking on the NZX but for the KFL 12% portfolio allocation I have with them, I would be satisfied if over the long term they continued to earn 10%.Fair enough.    Approaching retirement, I am mostly interested in yield these days and GARP stocks that pay decent yield. Everyone has different goals, I get that. I think the main purpose for me commenting on this one is the risks around that yield, but Ferg has done a better job of articulating that and indeed, the board themselves have now said their future dividends are subject to review so there's no need for any further barking from me on this one. 

I think most holders and commentators were expecting a dividend cut to 20c and I was surprised that that did not happen. I think it would have been prudent to do so, and I'm not as sensitive to yield as you are. As a general rule our biggest stocks don't pay much in the way of dividends. Spark is a bit of an exception - it has always been a yield stock and at current SP, even more so.

I enjoy the perspectives of both Ferg and Snoopy on the other channel and they are both forensic in their approach and come to opposite conclusions. Where Ferg see's structural decline, Snoopy sees overreaction and embedded value. They can of course be both right - SPK has high debt, increasing competion, margin pressure and a Government unwilling to invest in technology. All of that leads to pressure on dividend and market jitters. But - what is it now? - a 60% decline in share price? LOSS making FBU, with all of its real problems and paying NO dividend, is worth a $1 more per share than SPK? If the market looks like it doesn't make sense, then it's probably because it doesn't. If one looks through this period then one can see the intrinsic value of SPK. I have a 2-3 year perspective on Spark, because there's no reason to jump ship (sell low) when the yield (even if cut) is still respectful as a % of my average buy-in.
 

Who knows, you could be right.  Even 18 cps 75% imputed gives 22.8 cps gross which is reasonably supportive on the share price as at close of trade in Friday.  Comparing anything to FBU is a mug's game though as it sets such an incredibly low bar. From the other channel:

QuoteFletcher Building's recently appointed managing director doesn't think he needs to understand what went wrong under his predecessor.

Andrew Reding was asked point blank at Wednesday's analysts' briefing when he'd get around to telling us what he sees as having gone so wrong that a year ago his predecessor, Ross Taylor, and former chair Bruce Hassall had to fall on their swords.

"I'm not sure you will ever find out what went wrong," Reding said, and then piled on word salad about looking to the future.

What was that about those who fail to learn from history being doomed to repeat it?

Its pretty clear to me that if the new Chair doesn't want to understand what went wrong with FBU then FBU is an acronym for f***ery beyond understanding lol

Nice debate and thanks for the comments.

To clear the air and to avoid any potential misrepresentations.....whilst I think there are structural issues, starting with $1.86b in debts, I don't see SPK as being in terminal decline.  I think the various issues being discussed can be solved and/or mitigated.  But definitely not in a terminal decline (...for now, never say never!).  But much like the QE2, it will take a bit of time and effort to turn the ship around.  But once SPK are through this awful process, I expect they will come out a better business.....so long as the BoD and Mgmt engage in self reflection and have their mea culpa moment.

Most concerning to me, and picking up on LL's comment, is how you can have 2 people looking at the same thing and coming up with opinions / interpretations that are polar opposites.  It's actually a reflection of the state of MSM and wider society at the moment.  It's not good.

Quote from: Ferg on Feb 24, 2025, 11:00 AMNice debate and thanks for the comments.

To clear the air and to avoid any potential misrepresentations.....whilst I think there are structural issues, starting with $1.86b in debts, I don't see SPK as being in terminal decline.  I think the various issues being discussed can be solved and/or mitigated.  But definitely not in a terminal decline (...for now, never say never!).  But much like the QE2, it will take a bit of time and effort to turn the ship around.  But once SPK are through this awful process, I expect they will come out a better business.....so long as the BoD and Mgmt engage in self reflection and have their mea culpa moment.

Most concerning to me, and picking up on LL's comment, is how you can have 2 people looking at the same thing and coming up with opinions / interpretations that are polar opposites.  It's actually a reflection of the state of MSM and wider society at the moment.  It's not good.

Good points, Ferg. I wasn't inferring that SPK are in a terminal decline, just that there are a multitude of structural issues and bit of management complacence / neglect that has given rise to a period of decline, however long that period is. Given time, I think they will come round.  We'er on the same page on that I think.

I don't, though, think there's anything wrong in people having opposite views and debating them - that's a healthy thing. It's how it's done is the critical thing - too much one-up-man-ship, personal comments etc, ruins an otherwise good discussion. If people want to invest or not invest in a stock based on the facts as they see them and in accordance with their own personal investment strategy, then they have a perfect right to do so. We're all adults (I think). And I come back to different investment timeframes. What may seem like the wrong thing to do now, may turn out to be absolutely the right thing in 2-3 years time. How many times does a novice investor sell low and buy high on market sentiment, only to find the wind change and they are left stranded?
Anyway, let's see how this pans out. SP still looking fragile even at this level and an absurdly high yield.

https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/

Average analyst forecast now for only 14 cps earnings for FY25, rising to 16 cps and 18 cps in the years ahead, (compares to 22 cps in FY22).  Hmmm

ACC must see a bargain, increased holdings to 96m shares.  ::) https://www.nzx.com/announcements/447287

Crikey ACC losing big money.
Watch out premiums will be increasing.

Going ex div soon. Question is at this new low buy before or after dividend?

Have a look at the chart downtrend since early 2024.  A simple technical analysis strategy of selling on the breakdown in the 200-day moving average would have got people out at over $5 last year and kept them out and avoided a massive destruction of your capital.

Plenty of people on here thought you couldn't lose buying at $3, just scroll back a few pages and see for yourself.

Rather than asking yourself whether you should buy before or after the dividend perhaps first ask, what makes you think the downtrend is over ?

Quote from: Basil on Mar 17, 2025, 03:35 PMHave a look at the chart downtrend since early 2024.  A simple technical analysis strategy of selling on the breakdown in the 200-day moving average would have got people out at over $5 last year and kept them out and avoided a massive destruction of your capital.

Plenty of people on here thought you couldn't lose buying at $3, just scroll back a few pages and see for yourself.

Rather than asking yourself whether you should buy before or after the dividend perhaps first ask, what makes you think the downtrend is over ?

Perhaps the downtrend is over or not - I would suspect not considering the SP should drop, ex-dividend. But there's no loss for shareholders unless they sell and I can't for the life of me know why you would do that and crystallise the losses. Even if/when the dividend is cut to say, 20c that's a great, and sustainable, return on a utility stock, that will rebound once the factors that brought us to this point are resolved. Some of those are internal and some of them are about the wider NZ/global economy. Most stocks - including funds - are taking a pummelling right now, but if I was buying, a utility stock at historic lows offering an outstanding yield might not be as counter-intuitive as it looks. 

I know 20 cps is a popular theory on the other channel, but I really wonder if that is sustainable?  Average analyst forecast is for eps of 14.89 cps in FY26.  SPK on the record that they want to fund a new expensive data center and that they are doing a dividend reset later this year.  Maybe a radical dividend reset shock in the name of funding growth is coming?  A good old-fashioned approach of paying say 2/3's of eps, would see it reset to 10 cps.  Maybe it won't go that low, but I think those thinking it won't get cut under 20 cps could be setting themselves up for disappointment.  Time will tell...
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/
As for buying in a confirmed downtrend...what could possibly go wrong.  ;)

Quote from: Basil on Mar 17, 2025, 05:41 PMI know 20 cps is a popular theory on the other channel, but I really wonder if that is sustainable?  Average analyst forecast is for eps of 14.89 cps in FY26.  SPK on the record that they want to fund a new expensive data center and that they are doing a dividend reset later this year.  Maybe a radical dividend reset shock in the name of funding growth is coming?  A good old-fashioned approach of paying say 2/3's of eps, would see it reset to 10 cps.  Maybe it won't go that low, but I think those thinking it won't get cut under 20 cps could be setting themselves up for disappointment.  Time will tell...
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/
As for buying in a confirmed downtrend...what could possibly go wrong.  ;)

On the datacentre side of things they are looking for partners to take the pressure off capex and they are also looking at selling further non-core legacy assets, so I think free cash flow is going to be sufficient to avoid a radical reset. As for analysts forecasts - well they are not worth quoting or bothering about.

The worst thing one could do here, in my opinion, is to SELL in the downtrend. i.e crystallise losses. If one thinks that SPK will eventually rebound from its lows - whatever that may turn out to be - then sitting tight and banking the divvies is the best approach. If Spark do in fact cut their dividend drastically, then the equation changes, but whilst I think a cut is coming I don't think it will be radically lower. In my case my average price is sufficiently low enough for the divvy to be cut but to still get a good yield whilst I wait it out. 

Even with a juicy dividend only days away these are getting dumped like Musk is the CEO.

Can't see them not being sub $2 next week. Will bite in the 1.70's

Quote from: TraderRay on Mar 17, 2025, 10:58 PMEven with a juicy dividend only days away these are getting dumped like Musk is the CEO.

Can't see them not being sub $2 next week. Will bite in the 1.70's

Yes - probably will be sub $2 ex-dividend. But no reason to sell at those levels, if the yield remains high. The question to ask is - will SPK recover to $3 or $4 in the next 2-3 years. My view is that it will, in which case, keep banking the divvy's and sit tight - possibly even buy. But definitely NOT sell.

https://www.goodreturns.co.nz/article/976524193/spark-s-continuing-slide-helps-drive-nz-sharemarket-down-0-8-over-7-for-the-year.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+17+Mar+2025

Ferg, with all the extra debt SPK is carrying now compared to years gone by, maybe analysts predicting 15 cps for FY26 is about where this settles and your long term average of 20 cps for SPK no longer applies?  Thoughts ? 

Quote from: Basil on Mar 18, 2025, 11:28 AMhttps://www.goodreturns.co.nz/article/976524193/spark-s-continuing-slide-helps-drive-nz-sharemarket-down-0-8-over-7-for-the-year.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+17+Mar+2025

Ferg, with all the extra debt SPK is carrying now compared to years gone by, maybe analysts predicting 15 cps for FY26 is about where this settles and your long term average of 20 cps for SPK no longer applies?  Thoughts ? 

Lower interest rates should provide some relief from the higher debt levels, although that depends on existing forward interest rate contracts held by SPK and the speed of rate reductions versus debt level increases.....and whether or not SPK can maintain its credit rating.  A few moving parts.

I take issue with the last of the Connexa sale proceeds being used to fund the next dividend...surely that should go into debt reduction.  Given the growth in debts over the past 10 years for no growth in EPS, I question capital management policies at SPK.  I believe it is being addressed later this year.  That sounds to me like the BoD are 'hoping' for a better trading environment before having to make the hard decisions.

There seems to be a focus on valuing SPK based on dividends.  I predict the dividend will be cut further than most analysts are expecting which undermines such valuations.

So better to focus on EPS as you say, given the dividend uncertainty.  I haven't run the numbers on future EPS but SPK are looking to eliminate costs off the back of a soggy trading environment.  From the anecdotes I am hearing, I reckon the suspended Government revenues are not delayed....they are gone, and in some cases may not return.  And some of the headline numbers for mobile and broadband are heading in the wrong direction.  Returns from other initiatives like data centres do not have a high enough contribution to offset the other losses.  So yes I think SPK are heading for a lower EPS for a year or 2, but there are a few moving parts and some levers Management can pull.

I'm not putting too much effort into the FA on SPK right now given the price isn't attractive enough (for me, for now) but it is on my radar.

Patience.....buy in haste and repent at your leisure.  When I first posted (https://stocktalk.co.nz/index.php?topic=74.msg26101#msg26101) about SPK back in Sept 2024 while looking for a good dividend stock, the SP was $3.09.  It takes a lot of dividends to recover a 33% capital loss and make a return.  IMO it still looks like a dividend yield trap.

This article posted on the other site sums it up:
https://www.marketindex.com.au/news/asx-dividend-stocks-unpacking-one-of-the-markets-biggest-yield-traps

Great response Ferg, I have had this on my watchlist for 12 months. Damn glad I haven't bought any thus far.

$1.50 to $1.75 out of the question?? Must be an entry point around there for me.

Thanks Ferg, much appreciated.  Great post with which I agree 100% and great article.
It's got all the makings of a classic dividend trap to me.

Quote from: Greekwatchdog on Mar 18, 2025, 12:03 PM$1.50 to $1.75 out of the question?? Must be an entry point around there for me.

We might have to join the back of a very long queue at that price!  IMO such a price is possible but improbable unless the proverbial hits the fan.  I want to hear what the BoD and CEO have to say about turning this ship around but then it may be too late.....decisions.....decisions.....but I would rather de-risk any such buying by understanding the fundamentals better rather than taking a leap of faith.

If I stick to my well proven valuation methodology for no growth companies, which has saved me a tremendous amount of grief over the years, no growth companies are worth no more than 8.5 times next year's earnings and the average eps forecast for FY26 by 9 analysts is only 15 cps which suggests as low as $1.28 is possible (8.5 x 15 = $1.275).  Worse, if those Govt contracts are gone as you suggest and I think you are right, eps might only be 13-14 cps in FY26.

Very, very dangerous business buying in a downtrend. For me, I'll sit tight, not be tempted by an "apparent" super high yield and wait for as long as it takes for a new uptrend to start forming.

Quote from: LoungeLizard on Mar 18, 2025, 10:15 AMYes - probably will be sub $2 ex-dividend. But no reason to sell at those levels, if the yield remains high. The question to ask is - will SPK recover to $3 or $4 in the next 2-3 years. My view is that it will, in which case, keep banking the divvy's and sit tight - possibly even buy. But definitely NOT sell.

Look - we understand your situation. You kept the shares all the way down, bnought some more and sit now on a significant unrealized loss. Ouch. Difficult to give in this situation unbiased advise.

So, just allow me one question. If we (and you, it appears as well) assume the shares are going to further drop - why would it not make more sense to sell them now and buy them cheaper when the trend change is in?

You are saying "hold as long as the yield is high". Hmm, yes, sure, but did you ever consider what happens to the SP as soon as they announce a yield reduction? Unlikely that you can sell them at that stage still for the currnt premium, isn't it?

Nobody is perfect - and I have been in similar situations as well (holding in a downtrend, not with Spark, though). From my experience it feels like a liberation after you have sold a downtrending share ... and after that you can book every further SP drop as a personal gain. Makes one feel much better. The other thing is - ones mind opens up, and you see immediately all these other opportunities where you could invest your money.

If you don't hold anymore, the question would be is Spark really the best place to park once money after reaching the bottom? So many opportunities around - and lets face it, while Spark was always too dear and undercapitalized ... it never sparkled with the brilliance of its board and management team. 

Anyway ... each to their own - and good luck on your investment yourney.

Quote from: BlackPeter on Mar 18, 2025, 12:41 PMLook - we understand your situation. You kept the shares all the way down, bnought some more and sit now on a significant unrealized loss. Ouch. Difficult to give in this situation unbiased advise.

So, just allow me one question. If we (and you, it appears as well) assume the shares are going to further drop - why would it not make more sense to sell them now and buy them cheaper when the trend change is in?

You are saying "hold as long as the yield is high". Hmm, yes, sure, but did you ever consider what happens to the SP as soon as they announce a yield reduction? Unlikely that you can sell them at that stage still for the currnt premium, isn't it?

Nobody is perfect - and I have been in similar situations as well (holding in a downtrend, not with Spark, though). From my experience it feels like a liberation after you have sold a downtrending share ... and after that you can book every further SP drop as a personal gain. Makes one feel much better. The other thing is - ones mind opens up, and you see immediately all these other opportunities where you could invest your money.

If you don't hold anymore, the question would be is Spark really the best place to park once money after reaching the bottom? So many opportunities around - and lets face it, while Spark was always too dear and undercapitalized ... it never sparkled with the brilliance of its board and management team. 

Anyway ... each to their own - and good luck on your investment yourney.

No-one can pick the bottom of a downtrend, so I prefer not to make decisions about selling when businesses are at the bottom of the cycle. Yes, with the benefit of hindsight we can always find examples of when we should or should not have bought/sold, but my approach is to look through what is happening and towards the future.

In SPK'S case I feel Management are taking the necessary actions - reducing op-ex, deferring non-essential capex, bringing partners in, selling non core assets etc - and that in 2-3 years time they will be in a much better position as a company. And you have to think that the NZ recession will be temporary???

So no, selling and hoping to buy at a lower point is more for traders and short-term investors and not how I invest. I have a longer lens than most here and have seen downtrends come and go in most of my investments. Overtime, quality comes through and I don't doubt that will be the case with Spark.

It's interesting that those who appear to be the most hysterical about the SPK decline are in fact the non-holders. Sure, I don't like the paper loss, but as I say, if you take a long view and are confident that things will come right, there really isn't a need to panic sell.

A yield reduction to say, 18c, might push the SP to say, $1.80. Personally, based on my view on the future of Spark, I'd say that's a buy situation rather than a sell. Others of course will disagree. We won't know who is right for another 2-3 years.

Probably for another thread, but I'd say there's a good chance that the US will lead the world into a global recession within 6 months. There are signs of that now. In which case all shares are going to take a 20-25% haircut regardless of their relative strength. Maybe Spark, having already hit near rock bottom, might not be as affected to the same degree. Just a thought.

Quote from: Ferg on Mar 18, 2025, 12:19 PMwant to hear what the BoD and CEO have to say about turning this ship around but then it may be too late.

Why aren't they saying anything now? The downtrend and issues are not new. They talked about addressing things later this year only... WTF are they doing today?

Quote from: BlackPeter on Mar 18, 2025, 12:41 PMSo many opportunities around

I'm assuming off the NZX?

Quote from: LoungeLizard on Mar 18, 2025, 01:11 PMA yield reduction to say, 18c, might push the SP to say, $1.80.

Seems possible ex-div TBH

Quote from: LoungeLizard on Mar 18, 2025, 01:11 PMMaybe Spark, having already hit near rock bottom, might not be as affected to the same degree. Just a thought.

To be fair, you were confident it was near rock bottom at $3. 

Quote from: Basil on Mar 18, 2025, 03:37 PMTo be fair, you were confident it was near rock bottom at $3.

That's not quite right, Basil. If you look back on my posts I certainly was saying that I felt Spark was oversold and that the SP didn't look right and would over time correct itself. I certainly didn't expect it would go this low - and it will go even lower ex dividend -   but that's not the same thing as being confident that it wouldn't.
My investment timeframe is long-term, so I probably should resist the impulse to speculate as to where the SP will be in 3-6 months - it's pretty much just a guess anyway. Longer term (2-3 years) I think Spark will have recovered a good deal of the paper losses that shareholders are currently seeing, and I'm pretty sanguine about that as the yield (even if/when cut) will be one of the best on the NZX in the meantime.

Quote from: Basil on Mar 18, 2025, 03:37 PMTo be fair, you were confident it was near rock bottom at $3.

Hmm, none of us are immmortasl investors Basil including yourself after HGH blunder you made amongst others..

In the end we all own our investment philosophies that we the investor needs to meet to our own expectations.

Sometime it helps if one is a little more pragmatic about these things. I suppose it depends on that respective persons timeline in wanting to maximise their investment whether they drop the bone when things don't work out as they expected...

Quote from: Greekwatchdog on Mar 18, 2025, 04:37 PMHmm, none of us are immmortasl investors Basil including yourself after HGH blunder you made amongst others..

Dodged a bullet there in 2024, buying in a downtrend, (a salient reminder of the risks involved with that is evidenced by the current HGH share price).  Very relieved to get out at breakeven inclusive of dividend received.    The key question here is this, is SPK a growth company or a no growth company ?
On Ferg's excellent analysis all the evidence suggests it's a no growth company.
No growth companies are easy to value for those who know how to value them.
P.S. When you make a mistake, and all of us do from time to time including you, the key is limiting your losses.  Getting out at breakeven is something I count as a win !

Deleted.

Quote from: Basil on Mar 18, 2025, 05:13 PMOn Ferg's excellent analysis all the evidence suggests it's a no growth company.

I am sure ze analysis of Herr Von Verg vill indeed be excellent....

Quote from: Ferg on Mar 18, 2025, 11:54 AMThere seems to be a focus on valuing SPK based on dividends.  I predict the dividend will be cut further than most analysts are expecting which undermines such valuations.

So better to focus on EPS as you say, given the dividend uncertainty.  I haven't run the numbers on future EPS

....From the anecdotes I am hearing,....

I'm not putting too much effort into the FA on SPK right now

.....Vhen he gets around to doing eet, zhat eez.....

RB

Quote from: entrep on Mar 18, 2025, 02:03 PMI'm assuming off the NZX?

Both on the NZX as well as in other countries (plenty of opportunities in e.g. building industry, health and defence.

If we stay however on the NZX, I could say that most of the stocks trend currently better than Spark, but if you are looking for some solid investment opportunities trending upwards - what about e.g. (in no particular order and not complete) TRA, CDI, SEK, GNE, or even MCK (though just for a short term game)? ... and yes, there are plenty more currently down but with much better chances to start growing again (look into the agricultural and real estate sectors).

Quote from: Red Baron on Mar 18, 2025, 10:41 PMI am sure ze analysis of Herr Von Verg vill indeed be excellent....

.....Vhen he gets around to doing eet, zhat eez.....

You have the memory of a goldfish.....

https://stocktalk.co.nz/index.php?topic=74.msg26101#msg26101

A high level review was done some time ago.  The no growth EPS story line and using debt to pay dividends has been proved .... more detailed FA will be conducted once more information becomes available and/or my interest is *sparked*.

Speak English Snoopy.  Your continued act is ...... contrived.

Quote from: Ferg on Mar 19, 2025, 09:42 AMYou have the memory of a goldfish.....

https://stocktalk.co.nz/index.php?topic=74.msg26101#msg26101

A high level review was done some time ago.  The no growth EPS story line and using debt to pay dividends has been proved .... more detailed FA will be conducted once more information becomes available and/or my interest is *sparked*.

Zhanks for zhat.  I have been told I zuffer from "post traumatc stress disorder", a consequence of the hyper concentration required to become a vighter pilot.  I hyper concentrate on ze present and obliterate ze past.

Nevertheless, I theenk zhis zite could do vith a better 'zearch' vacility to be zure!

Quote from: Ferg on Mar 19, 2025, 09:42 AMSpeak English Snoopy.  Your continued act is ...... contrived.

Your continued attempts to conflate me vith my arch nemesis is amusing.  I mean, take a rat, stick on a big nose and a couple of vloppy ears and vhat do you have?   Zhat 'creature' vhich must not be mentioned (vhich you nevertheless did) zhat zleeps on ze top of a doghouse all day!   He has no qualifications apart from zhose he imagines in his own fantasies.  And you say you vould rather engage vith that?

Vhat is zhis fascination vith cartoon characters anyway?   I vould bet if you vere zummoned to ze Vhitehouse and Donald Trump came out to zee you, ze first zhing you vould say eez
"Hey, what are you doing here.  I came to meet Donald Duck."

On ze other hand you have me, a 'real person'.  A zkilled vighter pilot of ze Jagdestaffel, vith instrument training and ze ability to assimilate data at an incredible rate.   Exactly ze skills needed to play ze ztock market.

Vurthermore as vell as being a 'master of attack' (taking a position), I am also a master of defence (getting out).   I am ze master of ze 'barrel roll' and also ze 'loop the loop'.  And I have ze zertificates to prove eet.  In vact at my last medical examination I vas officially certified as a "complete loopy."   Now I put it to you, who else can you engage vith having qualifications like zhat?

RB

Interesting HUGE rebalancing day trades for SPK, over 58 mill shares crossed today at $1.99 VWAP

The  1 mnth chart begins to look interesting from a TA point .......

SPK is not for me..... but interesting to watch from the sidelines..

ZZZZZZ Wake me up when it hits 2.40. But now that I have posted it will probably drop back. ;D

Quote from: seaweed on May 08, 2025, 03:18 PMZZZZZZ Wake me up when it hits 2.40. But now that I have posted it will probably drop back. ;D

If that's your average price then you may do well out of SPK in the next few weeks/months. Me, I've a got a bit to go yet before I can take a deep breath. Hopefully the divvy won't get cut too much in the meantime.  :-\

Quote from: LoungeLizard on May 08, 2025, 03:31 PMIf that's your average price then you may do well out of SPK in the next few weeks/months. Me, I've a got a bit to go yet before I can take a deep breath. Hopefully the divvy won't get cut too much in the meantime.  :-\

My av price is higher about 2.80 so this has turned into a long play but did top up and got extra 31,000 between 2.01 and 2.07 to get ave price down. So back to sleep on this one for now.

Looks like price is being squeezed between all-time low resistance and decending channel may exit channel and rise to $3.50 ish between AVWAP ATH and ATL, if they can flog off the data centers, but price might just linger here at $1.80-2.30 reflecting its legacy telecoms status.
SPK_2025-05-08_16-02-26.png

Spark announces strategic network partnership with Nokia:

https://www.nzx.com/announcements/451792 (https://www.nzx.com/announcements/451792)

Quote from: LoungeLizard on May 19, 2025, 08:49 AMSpark announces strategic network partnership with Nokia:

https://www.nzx.com/announcements/451792 (https://www.nzx.com/announcements/451792)

Nokia? Another blast from the past. They used to be great in the time Telecom NZ could still milk their customers thanks to a telecommunication monopoly, but today?

Interesting history, anyway - Nokia produced mining equipment in the early 20th century, they made great toilet paper in the 1960íes, and in the early years of this century they have been known for producing quite good cellphones (well, bricks in hindsight, but still, not bad at the time). Just wondering, though what they are doing these days Spark could benefit from? I guess sure, the Networking division they bought in did benefit from the US bullying everyone into banning Huawei network elements, but whether benefitting from one Autocrat banning the technology of the other autocrat is a long term winning strategy? Not so sure.

But who knows, maybe Nokia benefits from Kiwi Ingenuity and runs the future Gen 6 on a number 8 wire :) ?

Or otherwise they both might be aging dinosaurs comforting each other ... who knows?

My first thought too - Nokia, what a dinosaur. Absolutely no idea what they are up to now

Yep, Nokia are only a NZ$47 billion company. What a dinosaur indeed.

Quote from: LoungeLizard on May 19, 2025, 12:03 PMYep, Nokia are only a NZ$47 billion company. What a dinosaur indeed.

Maybe you don't understand the nature of a dinosaur?

They used to be really big and then they went extinct due to a failure to adapt to environmental changes :);

This is interesting.  Nokia shares traded at ~ 6 times their current price 25 years ago !!  Similar to Spark's terrible long term performance.  Just as well the dividends have slowed the share price decline of Spark...at least for now...but with dividends set to be reviewed later this year, for how much longer...  The TA on this looks absolutely terrible as noted by Cod in post #421 above.
https://www.macrotrends.net/stocks/charts/NOK/nokia/stock-price-history#google_vignette

Quote from: Basil on May 19, 2025, 12:59 PMThis is interesting.  Nokia shares traded at ~ 6 times their current price 25 years ago !!  Similar to Spark's terrible long term performance.  Just as well the dividends have slowed the share price decline of Spark...at least for now...but with dividends set to be reviewed later this year, for how much longer...  The TA on this looks absolutely terrible as noted by Cod in post #421 above.
https://www.macrotrends.net/stocks/charts/NOK/nokia/stock-price-history#google_vignette

Well spotted - pretty shocking chart.

Screenshot 2025-05-19 163736.png

Wherever the SP might break out of the symmetric triangle (starting ~2010) - it looks like most of the energy left the dino already ... good match for Spark.

As a 'var veteran' I veel I am qualified to zay a vew on thees thread are in line vor a 'VC' gong.   But not that VC.

I mean 'VC' standing vor 'Vhite Cane.'   Dished out especially vor zhose who cannot discern a zhare bargain, even eef eet eez ztaring them, directly een ze vace.

RB

Red Barron. Please feel free to translate these words into whatever language you like.
Value Trap.
Dividend Trap.
To help with your understanding and translation I offer you this guide.  https://www.dividend.com/dividend-education/how-to-spot-a-dividend-value-trap/
Even if you look 2 years out to FY27's numbers analysts are only talking eps of 16 cps, well down on the 10 year average.  There is no growth and none forecast.
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/ Put a no growth PE of 8.5, (using this famous Ben Graham valuation principle for no growth companies has saved me a 101 truckloads of anguish over the decades), on 16 cps and fair value is only $1.36.  Oh dear...

Quote from: Basil on May 19, 2025, 06:02 PMRed Barron. Please feel free to translate these words into whatever language you like.
Value Trap.
Dividend Trap.
To help with your understanding and translation I offer you this guide.  https://www.dividend.com/dividend-education/how-to-spot-a-dividend-value-trap/
Even if you look 2 years out to FY27's numbers analysts are only talking eps of 16 cps, well down on the 10 year average.  There is no growth and none forecast.
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/ Put a no growth PE of 8.5, (using this famous Ben Graham valuation principle for no growth companies has saved me a 101 truckloads of anguish over the decades), on 16 cps and fair value is only $1.36.  Oh dear...

Ze precipitous zhare price vall at Spark vas largely a 'vashion statement'.

Investors decided zhat zpeculation of ze future earnings at 'data centres' (promoted by Infratil) carried more veight zhan ze present day earnings of Spark (even though Spark eez also going ze data centre vay - go vigure!)  Brainless vorced index zelling explains ze reason for ze zharp Spark zhare price decline.

Now earnings:, ve are een a recession - I get zhat.   But you have to ask ze question. 
"Vhere are Spark being creamed by their opposition een a vay zhat vill lead to a permanent loss of compeititiveness and earnings decline?"
And ze answer eez, zhey are not.

Maybe zhose big business and government contracts vill not come back in FY2026 or even FY2027.   But ze need to digitise ze economy has not gone away.  I cannot zay vhen the zun vill zhine again on Spark.   But I can bet zhat it vill.  And in ze meantime I am being paid handsomely to vait.    And datacentres?  5G applications?  Plenty of potential new growth potential een ze vings!

RB

P.S.  Analyst views vrom your link:  5 buy, 1 outperform. 3 hold.  Consesus zhare price target $2.96.  Enough zaid!

 

Quote from: BlackPeter on May 19, 2025, 12:43 PMMaybe you don't understand the nature of a dinosaur?

They used to be really big and then they went extinct due to a failure to adapt to environmental changes :);

Nokia is extinct? When did that happen?

Quote from: Red Baron on May 19, 2025, 07:03 PMP.S.  Analyst views vrom your link:  5 buy, 1 outperform. 3 hold.  Consesus zhare price target $2.96.  Enough zaid!

The same analysts that on average had a price target of over $4 a few months ago when the shares were ~ $3.   They're just following the market down.

Quote from: Basil on May 19, 2025, 08:20 PMThe same analysts that on average had a price target of over $4 a few months ago when the shares were ~ $3.   They're just following the market down.

During ze early days of ze 'Great Var' (1914 to 2025 zo far), I zpecialised in 'vollowing theengs down', and indeed provided zome assistance een thees process.  Zhey generally crashed een a rural French paddock.    However not all downvard trends end een thees vay.    A zertain Sopwith Camel pilot who must not be mentioned by name eescaped vor example.   Zometimes it takes a bright 'Spark' (you zee vhat I deed there) to 'read ze zkies' and be able to spot ze coming change een trajectory before eet becomes obvious to all.

RB



   

In the early days Telecom as it was known then showed true marketing brilliance of a level we see with Turners Tina campaign, with their brilliant Spot the telecom dog campaign.  Many will remember these well loved advertisements such as this one https://www.youtube.com/watch?v=l66fh7_YHVQ    Sadly this sort of creativity left the building a long time ago with Spark.

Quote from: Red Baron on May 19, 2025, 08:54 PMDuring ze early days of ze 'Great Var' (1914 to 2025 zo far), I zpecialised in 'vollowing theengs down', and indeed provided zome assistance een thees process.  Zhey generally crashed een a rural French paddock.    However not all downvard trends end een thees vay.    A zertain Sopwith Camel pilot who must not be mentioned by name eescaped vor example.   Zometimes it takes a bright 'Spark' (you zee vhat I deed there) to 'read ze zkies' and be able to spot ze coming change een trajectory before eet becomes obvious to all.

RB

https://www.nzherald.co.nz/business/at-least-two-private-equity-firms-circling-spark-report/YEZXZKE72ZBIDM6BAYUL4HVJPQ/
At least two private equity firms are "going over" Spark as they "ponder a buyout proposal," according to a report in The Australian's Dataroom market gossip column.

Probably just gossip but who knows for sure.

Morningstar and Craigs Investment Partners analysts are among those who think the stock has been oversold.

IMO private equity = big egos.  But sniffing around SPK sounds delusional.  It won't end well for someone.

More evidence of slack management at SPK

https://www.stuff.co.nz/nz-news/360695363/spark-it-contractors-jailed-part-new-zealands-largest-private-sector-corruption-case

Quote from: Left Field on May 20, 2025, 08:55 PMMore evidence of slack management at SPK

https://www.stuff.co.nz/nz-news/360695363/spark-it-contractors-jailed-part-new-zealands-largest-private-sector-corruption-case

Vhat slack management?  Eet vas Spark zhat found them out!

https://www.nzherald.co.nz/nz/crime/corporate-corruption-australians-mark-lester-sean-bryan-sentenced-for-4m-spark-nz-kickbacks-scheme/54J2IYYSAZEYFHFD2AC3DYZPTM/

"Court documents describe Lester as "dominant in determining and directing the flow of work to Victory" and justifying the higher rates even as others within the company tried to raise the alarm."

Two corrupt eendiveeduals vound out by Spark, and who are now being zued by Spark to recover ze money.   It zeems as though Spark deed ze right things.   Doesn't zound like slack management at Spark to me.

RB



 

scandi's create the first oop computer languages and continue to develop technologies...

AUS created there own wi fi chip... NoKIA has routing silicone...

Scani countries are technology hubs and have been since the 1960's with the invention of OOP compiler technologies that extended software o top of US hardware...

technology innovators.. like the dutch..

in the early 1980's dutch engineers did a lot of IT work in this country... as i young man i was sent by them back to holland to scull boats and learn about europe...

this few islands at the bottom of the world is not as world leading as you think....

Quote from: Left Field on May 20, 2025, 08:55 PMMore evidence of slack management at SPK

https://www.stuff.co.nz/nz-news/360695363/spark-it-contractors-jailed-part-new-zealands-largest-private-sector-corruption-case

Jeez - $4m kickbacks on a $20m contrract and they needed the SFO to point this out to them. Clearly - Spark seems to have a governance system well suited for any banana republic. The three apes spring to mind.

Ideal investment material ...

SPK been in a slow uptrend in last 12 weeks. But looking at Cods graph it is in over bought territory above $2.30c. Now that I have posted it will probably do the usual and drop back later this afternoon if ASX SPK has its way lol.

And now this weeks song for SPK sp...... "The Long And Winding Road" Oh Oh Ode. On the Album  "Let It Be" The Beatles.  ( The long grinding road. ) ;D

Really cool piece in BusinessDesk today by guy from Elevation Capital
Spark's brain-rot era: What is next for the beleaguered telco?

Like this bit -

Even after Chorus was spun off, Spark had a healthy 41% (or thereabouts) market share. And yet, as anyone with a cursory interest in the NZX knows, Spark's recent stock price has been rolled over by a bulldozer and then thrown off a ravine for good measure.

To understand what the hell happened, let's talk about the common factor between The Warehouse and Spark: McKinsey.

McKinsey is the giant vampire squid of consulting. Many managers suffer from the delusion that if things aren't going well, then the best option is to pay millions to McKinsey, which will then give you a lot of nonsense words like "agile" and "operational cadence".

Start running

These are words that should be banned by any sane manager. When people start using the words "leadership squad" seriously (like they are members of a B-Grade Marvel spin-off whose only superpower is delusion), then as an investor you need to start to run. Fast.

Never really thought of comparing Spark to Warehouse but it does seem to be a pretty good one

https://businessdesk.co.nz/journalist/eden-bradfield
Prob paywalled

When retirement villages need to hire consultants to tell them how to do the basics of selling units, its also time to run, especially when they use repeated references to sales cadence to try and obfuscate poor sales numbers.

Quote from: Basil on Jul 12, 2025, 11:48 AMWhen retirement villages need to hire consultants to tell them how to do the basics of selling units, its also time to run, especially when they use repeated references to sales cadence to try and obfuscate poor sales numbers.

'Operational cadence' what Spark uses sounds really cool though eh Basil

Quote from: winner (n) on Jul 12, 2025, 11:54 AM'Operational cadence' what Spark uses sounds really cool though eh Basil

LOL Sounds like a crock of s**t.

Quote from: winner (n) on Jul 12, 2025, 08:14 AMStart running

Start... running? Start? Fast?

That could've been timely advice a year ago at latest. The share price has been recovering steadily for three months now.

SPK sp looking strong this morning. I wonder if it was Jenny Ruth's posting yesterday on the other  ST forum . 

Sorry to bore you people about this sick puppy, but something seems different this year. They say no news is good news. Results out on Wed. 20 August. Last year was Friday 23 August. Is the old saying goes bad results usually come out on a Friday. The sp seems quite strong recently. Am still sitting on quite a lot after selling and buying back again.     

Quote from: seaweed on Aug 08, 2025, 11:51 PMSorry to bore you people about this sick puppy, but something seems different this year. ... Am still sitting on quite a lot after selling and buying back again.     

No need to apologise seaweed. I wish you well. You saw div/yield while many of us saw div/trap.

Interesting to watch from the sidelines, it seems you have had to work v hard to recover your investment?

Quote from: seaweed on Aug 08, 2025, 11:51 PMSorry to bore you people about this sick puppy, but something seems different this year. They say no news is good news. Results out on Wed. 20 August. Last year was Friday 23 August. Is the old saying goes bad results usually come out on a Friday. The sp seems quite strong recently. Am still sitting on quite a lot after selling and buying back again.     

The sick puppy is recovering well and it's worst days are behind it. The marvels of modern management. The results won't be great I wouldn't imagine, but hopefully a dividend of around 12c will keep Mr Market happy. 

Quote from: LoungeLizard on Aug 09, 2025, 11:33 AMThe sick puppy is recovering well and it's worst days are behind it. The marvels of modern management. The results won't be great I wouldn't imagine, but hopefully a dividend of around 12c will keep Mr Market happy. 

Zorry I must have been azleep.   Vhat have management done again zhat eez zo marvelleous?

?  Mobile market zhare ztill under pressure?
?  No announcment on data zentre partnetzhip?
?  Big data projects vor Government and Big Business ztill on hold?
?  New CFO Ztewart 'zolves' debt issues by zaying 'no worries'?

RB

https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/
Trades on 17.3 times forecast FY26 earnings for a no growth company which means the only reason to own it is for yield.  How low will the dividend reset go, that's the $64,000 question ?  The average of 9 analysts is for DPS of 18 cps in FY26.  If its cut to the low teens I think many investors will be disappointed.

Quote from: Red Baron on Aug 10, 2025, 08:46 AMZorry I must have been azleep.   Vhat have management done again zhat eez zo marvelleous?

?  Mobile market zhare ztill under pressure?
?  No announcment on data zentre partnetzhip?
?  Big data projects vor Government and Big Business ztill on hold?
?  New CFO Ztewart 'zolves' debt issues by zaying 'no worries'?

RB

Mobile market share is pretty solid, it's the Government telco services that have been hit. That's not their fault - we have a Government that has given up investing in anything. So SPK have been downsizing/refitting the organisation to suit the economic climate and into areas where the ROI is better. Selling legacy, non-core assets like Connexa is part of that. Cutting labour and op-ex costs in-year and on-going is another. Looking for strategic partners (Infosys/ Nokia ) is also an attempt to reduce capex.

 You could argue that they could and should have done this sooner and I would agree with that. They have been complacent and have got punished for it. But you could also argue that the market has been too harsh and the massive selloff was unwarranted. Seems to be swinging back in favour again. The yield, current and forecast, seems perfectly acceptable to me at these prices, particularly with the SP moving upwards again.

` 

Quote from: Basil on Aug 10, 2025, 12:24 PMhttps://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/
Trades on 17.3 times forecast FY26 earnings for a no growth company which means the only reason to own it is for yield.  How low will the dividend reset go, that's the $64,000 question ?  The average of 9 analysts is for DPS of 18 cps in FY26.  If its cut to the low teens I think many investors will be disappointed.

Basil at $2.59c what would the YLD be with 18c div. My calcs around 7%. and if lower am happy with 5% YLD short term at the moment.   

Hi Seaweed.  Assuming they can pay that level of dividends going forward and fully impute it, which may not necessarily be safe assumptions given they were not fully imputing the 25 cent divvy and forecast EPS is only 15 cps for FY26, then the gross dividend would be 18 / 0.72 = 25.  25 / 259 = 9.65%.
Best wishes with it mate.  You know its not for me and I suspect this puppy is not going to go on and win any awards at any dog show for the foreseeable future.
Sometimes sick puppies never make a full recovery and then have a permanent limp afterwards.  I suspect that's the case here.

Quote from: Basil on Aug 11, 2025, 10:10 AMHi Seaweed.  Assuming they can pay that level of dividends going forward and fully impute it, which may not necessarily be safe assumptions given they were not fully imputing the 25 cent divvy and forecast EPS is only 15 cps for FY26, then the gross dividend would be 18 / 0.72 = 25.  25 / 259 = 9.65%.
Best wishes with it mate.  You know its not for me and I suspect this puppy is not going to go on and win any awards at any dog show for the foreseeable future.
Sometimes sick puppies never make a full recovery and then have a permanent limp afterwards.  I suspect that's the case here.

Thanks Basil. Mentioning sick dogs. My sisters old dog is stumbling around on three legs and I am on call to help lift her into the car when the time comes for her last drive to the vet. Back to SPK, Am lucky to have got back to over weight after ex div date, they up 30% since, but it was a hard road. Also PGW agm tomorrow, have bought more SPK,GNE,PGW,RBD,TRA and FSF in the last week. Am looking forward to PGW results cross fingers. 

Quote from: seaweed on Aug 11, 2025, 11:06 AMThanks Basil. Mentioning sick dogs. My sisters old dog is stumbling around on three legs and I am on call to help lift her into the car when the time comes for her last drive to the vet. Back to SPK, Am lucky to have got back to over weight after ex div date, they up 30% since, but it was a hard road. Also PGW agm tomorrow, have bought into SPK,GNE,PGW,RBD,TRA and FSF in the last week. Am looking forward to PGW results cross fingers. 

Yes, it has been a hard road for those of us who have been long term SPK investors, but as long as one does not panic or is forced to sell at the low point, then using the downtrend to reduce average buy-in can be a successful strategy. Particularly, as Basil calculates, you are getting nearly 10% at the reduced prices. One needs to have nerves of steel though (and a bit of faith/luck) that the SP will eventually recover. Which, in SPK's case, being so clearly oversold, it was always likely to do.
You'll be enjoying the FSF run, Seaweed?

Sale of 75% SPK's data centre interests.......interesting.  Selling the Crown Jewels!?? At least SPK's continued div/yield is assured....

https://www.nzx.com/announcements/456574

Spark announces sale of 75% of data centre business
 
 Spark New Zealand (Spark) today announced it has entered into an agreement to sell a 75% interest in its data centre business to Pacific Equity Partners (PEP). The investment will be made from PEP's Secure Asset Fund, which invests in infrastructure growth platforms.
 
 The transaction values the business at up to $705 million(1) , representing a FY25 pro-forma EBITDA multiple of 30.8x(2). As cloud and AI uptake continues to increase demand for data storage and compute in New Zealand, the introduction of a capital partner secures a funding pathway to build out Spark's planned 130MW+ data centre capacity development pipeline.......

Quote from: Left Field on Aug 12, 2025, 08:49 AMSale of 75% SPK's data centre interests.......interesting.  Selling the Crown Jewels!?? At least SPK's continued div/yield is assured....

https://www.nzx.com/announcements/456574

Spark announces sale of 75% of data centre business
 
 Spark New Zealand (Spark) today announced it has entered into an agreement to sell a 75% interest in its data centre business to Pacific Equity Partners (PEP). The investment will be made from PEP's Secure Asset Fund, which invests in infrastructure growth platforms.
 
 The transaction values the business at up to $705 million(1) , representing a FY25 pro-forma EBITDA multiple of 30.8x(2). As cloud and AI uptake continues to increase demand for data storage and compute in New Zealand, the introduction of a capital partner secures a funding pathway to build out Spark's planned 130MW+ data centre capacity development pipeline.......

Market seems to like it, as it may assure dividends going forward.
Difficult to now what to make of it. Is this a strategic decision recognising that they have overcommitted resources and need to scale back, or has it been brought on just to get the books in order? Probably both. But it does seem to be at odds with their recent statements around the pivot towards datacentres. Maybe 25% is a better sized footprint for now, with potential to expand once debts have been reduced. Will be interesting to see how this plays out.

Market saying it is not impressed by today's news.

SP hasn't broken through the $2.50 resistance with confidence. Not encouraging in terms of SP appreciation, but at least the next few dividends are in the bank.  GLH's.

Maybe the sick puppy has a permanent limp going forward from carrying all the weight of many years of excessive borrowings to pay higher dividends than earnings ?  Analyst forecast is only 15 cps in EPS in FY26.  If they don't revise the dividend level down to that level or slightly lower, the directors have learned nothing from past mistakes.

Morningstar seems to suggest the datacenter sale was more about getting debt down, and probably a good move:

Event analysis

Spark New Zealand: Sells 75% of Data Center Field of Dreams

Spark New Zealand has agreed to sell a 75% interest in its data center portfolio to Pacific Equity Partners. The deal values the asset at a base enterprise value of NZD 575 million (22.9 times pro forma EBITDA), increasing to NZD 705 million on achieving earn-out targets (30.8 times EBITDA).

Why it matters: Group net debt/EBITDAI has crept up to 2.3 by the end of 2024, due to the abrupt earnings downturn that began 18 months ago. The leverage ratio is substantially above the 1.7 threshold to maintain Spark's A- credit rating. Since then, Spark has sold its remaining Connexa stake for NZD 311 million. Combined with the initial cash proceeds of NZD 486 million on completion of the data center sale, we calculate net debt/EBITDAI would fall to around 1.9 on our pro forma fiscal 2025 earnings estimates. There may be more to come, to the tune of NZD 98 million, if the data centers hit certain performance-based targets by the end of 2027. Furthermore, Spark's remnant 25% interest ensures its shareholders can still benefit from the data center "field of dreams" to be rolled out.

The bottom line: We maintain our NZD 3.60 per share fair value estimate for narrow-moat-rated Spark, or AUD 3.20 at current exchange rates. We make no changes to our forecasts, with the completion of the data center portfolio sale not expected until the end of 2025. Shares in the group remain at an attractive discount to our intrinsic assessment. Investor caution is understandable, given the three downgrades to earnings guidance over the past 18 months. Tangible evidence of cost-outs is needed with the upcoming result to assuage such caution. However, the data centers have been monetized at a good price, especially compared with the NZD 200 million-NZD 220 million capital we estimate Spark has pumped into building them since fiscal 2021. The proceeds should go a long way toward calming investor nerves about the balance sheet.

I don't hold SPK and simply note that TA confirms weakness after the recent announcement.

I've circled the $2.50 - $2.90 gap that needs to be filled for TA confidence to return.

JMHO. GLH.

Quote from: Left Field on Aug 13, 2025, 04:06 PMI don't hold SPK and simply note that TA confirms weakness after the recent announcement.

I've circled the $2.50 - $2.90 gap that needs to be filled for TA confidence to return.

JMHO. GLH.

Zhere eez a zimple explanation vor zuch zhare price behaviour:
"Buy ze rumour, zell ze vact."

Ze data zentre zale vas zo vell zignalled, you vould have to be blind, deaf and dumb and living under a rock not to know eet vas coming up.

Let us zee vhat happens vith ze full year announcement next veek.....

RB

Yep, too soon to tell how the datacenter sale is going to play out with the market. More important is the full year result and final dividend announced on weds 20/8. 

Quote from: Red Baron on Aug 13, 2025, 04:25 PMZhere eez a zimple explanation vor zuch zhare price behaviour:
"Buy ze rumour, zell ze vact."

Ze data zentre zale vas zo vell zignalled, you vould have to be blind, deaf and dumb and living under a rock not to know eet vas coming up.

Let us zee vhat happens vith ze full year announcement next veek.....

RB

Deleted

From the Herald 16/8/25.

Passing interest.

Lanes on the Auckland Harbour Bridge will be closed for six hours on Sunday while Spark films a commercial.

Two middle northbound lanes will be closed between 3am and 9am on Sunday for "filming", NZ Transport Agency Waka Kotahi said in a traffic bulletin.

"All other lanes will be open and impact should be minimal, with traffic expected to be light at this time of day."

Asked what was being filmed on the bridge, a NZTA spokesperson said telecommunications provider Spark was filming a commercial.

Quote from: LoungeLizard on Aug 13, 2025, 04:30 PMYep, too soon to tell how the datacenter sale is going to play out with the market. More important is the full year result and final dividend announced on weds 20/8. 

A few nervous holders out there today. Not to worry, prayed for a 8c  div in September which will bring the year div to 20.5c and save the company about $113m dollars . Correct me if I am wrong :)   

Sounds right. I think everyone expects some sort of cut and I think it should be acceptable to the market. The yield is still very good even at 20.5c.  I'm hoping for a 10c final divvy myself. Some might say that is a sign of a company in decline, but I'm a long term investor and I'd rather they used the proceeds of the sales to get debt down. Worst thing in my view would be to try and maintain the too high dividend and be accused of papering over the cracks. Get the balance sheet in order then make those cuts to OPEX to pay a sustainable divided. 

Results out......I'll leave it to holders to comment further, but suspect they will like the dividend!

https://api.nzx.com/public/announcement/457063/attachment/449908/457063-449908.pdf

Not sure about maintaining the 25c dividend - missed opportunity in my view to draw down debt further.

 Nice bonus for shareholders I guess, but won't be able to be maintained at 100% of re-defined FCF. Even at the top of guidance of 330m FCF that's about 17.5c payout for 2026, if the data centre proceeds all go to pay down debt, as it should.

On the whole, the result is ok in that it was expected. Everything appears to be stabilising. The next year or two will be interesting. I liked the comment :

"Our focus is returning Spark to its history of stable annuity-like returns, with predictable free cash flow and growing dividends over time for our shareholders."

Quote from: LoungeLizard on Aug 20, 2025, 09:16 AMNice bonus for shareholders I guess, but won't be able to be maintained at 100% of re-defined FCF. Even at the top of guidance of 330m FCF that's about 17.5c payout for 2026, if the data centre proceeds all go to pay down debt, as it should.

If SPK pay out 100% of FCF as dividends, then how and when do debts ever get repaid?  There are asset sales but that would reduce top line sales and NPAT too.

Quote from: Ferg on Aug 20, 2025, 09:49 AMIf SPK pay out 100% of FCF as dividends, then how and when do debts ever get repaid?  There are asset sales but that would reduce top line sales and NPAT too.

Maybe it is similar to property loans mentality. Have been told in the past, don't worry about your mortgage on the house borrow more and inflation over time will deal to that.

Quote from: Ferg on Aug 20, 2025, 09:49 AMIf SPK pay out 100% of FCF as dividends, then how and when do debts ever get repaid?  There are asset sales but that would reduce top line sales and NPAT too.

I suppose their aim is to get group debt back to levels which will regain their S&P AA rating. Current and proposed asset sales will probably do that. They will then be able to pay 100% of FCF without necessarily having to pay down further debt. FCF will include changes all core business expenditure including changes to working capital and capital expenditure. What else to use the money on other than to maintain a good yield, which is crucial for long term investors like myself who regard SPK as income stock.

Quote from: LoungeLizard on Aug 20, 2025, 12:16 PMI suppose their aim is to get group debt back to levels which will regain their S&P AA rating. Current and proposed asset sales will probably do that.

Convirmed:   Vrom ze 2024 December trading update:

https://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/audio/Spark_FY25_Trading_Update_301024.mp3

-----------------------

Entro Rankovsky (ENP):  Does the potential to sell non-core assets mean the chances of a hybrid note issue is now reduced?
Stefan Knight (CFO):  The overarching goal is to get back to a normalised debt level (1.7x Net Debt to EBITDA).  At FY result time a hybrid note seemed the most likely option.  The announcement of the sale of the residual Connexa holding is additional information.  All factors will be put together in continuing to assess the options.  We will give an update as things progress in that space.

---------------------------

And next vrom ze FY2025 profit announcement

--------------------------

"We have made good progress since that time. We undertook a strategic review of non-core assets to recycle capital into our core business and reduce net debt. This culminated in the sale of our remaining stakes in Connexa and HTAL (Hutcheson Telecommunications), delivering combined proceeds of $356 million.

"To support the growth of our data centre business, we were pleased to announce we had entered into an agreement to sell a 75% interest to Pacific Equity Partners (PEP) in August. The agreement values the business at up to $705 million, which represents a FY25 pro-forma EBITDA multiple of 30.8x and
compares favourably to similar transactions.
"The combined $533 million that will be received in FY26 from the HTAL divestment and initial cash proceeds from the data centre transaction are expected to reduce our net debt/EBITDAI ratio by 0.5x to~1.7x."


------------------------------------

Zo new CFO Stewart and old CFO Stefan zeem to now agree on ze 'Spark' company debt target (ze S&P A- target).    Asset zales have put eet vitheen reach!

But zhere eez no need to pay back more debt zhan zhis - ever.    Running vith a certain debt ratio enhances capital efficiency

RB

Market seems to like the result and the higher than expected dividend. Going forward I am optimistic that SPK are over the worst. Even if the yearly dividend is cut to 17.5c that's still nearly 7% yield on current prices. If the SP goes up, as many expect, to $3 in the short term, then the yield of course drops but investors going in now, get a tax free capital gain. Not a bad scenario either way.

Spark are not for me but a rising tide lifts all boats in terms of lowering the bar with lower interest rates.  Further cuts in the near term, (see extract of N.Z. Herald article below) perhaps as early as October and then again in November should give all dividend hound type stocks a lift.  Best wishes to holders.

QuoteThe Reserve Bank cut the Official Cash Rate by 25 basis points to 3%, acknowledging stalled economic recovery.  Two more rate cuts are expected by March, potentially lowering mortgage rates, but the housing market outlook remains subdued.
The decision caused the Kiwi dollar to fall and the NZX50 stock market to rally.
The Reserve Bank appears to have heard the cries of the struggling business sector, not just cutting the Official Cash Rate by 25 basis points as expected, but shifting its outlook to recognise that the economic recovery has stalled.
Based on the new Official Cash Rate (OCR) track published today, two more rate cuts are expected by March next year, taking it to 2.5%.
That's in line with the outlook of some of the gloomiest economists at ANZ and KiwiBank.
"That's a much bigger drop than we had expected, with the RBNZ's [Reserve Bank] OCR track now very similar to our own forecast," ANZ chief economist Sharon Zollner said.
"We thought lingering concerns about near-term upside inflation risks would prevent such a large change in view from the RBNZ today. But while both upside and downside risks were mentioned in the press release, the focus is clearly very much on the latter."
ANZ is now forecasting the next two 25-basis-point (bps) cuts to come in October and November(previously it had predicted November and February).

SPK exited down channel, formed very tight up channel (high conviction) but not overexuberance. Notional target $3.50 ( From chart on May 08 2025)
SPK_2025-08-20_19-09-35.png

SPK's cunning plan for the future!? Hardly inspiring.

https://www.nzx.com/announcements/458552

SPK's FY2025 Annual Meeting presentation.

https://api.nzx.com/public/announcement/462208/attachment/456126/462208-456126.pdf

Chair & CEO's presentations

https://api.nzx.com/public/announcement/462208/attachment/456125/462208-456125.pdf

No change in guidance (so far) that's good for holders, however from a TA point of view,  the sentiment remains negative.

Forsyth Barr have recently downgraded to "UNDERPERFORM"

QuoteForsyth Barr have recently downgraded to "UNDERPERFORM"

I zee zhat 'pompous pup' whose name must not be mentioned, doesn't buy it though.    In vact he zeems to be buying ze zhares again:  doubling down.  Can zhat be right?    Zomeone needs to go over to zhat other place and tell heem vrom me, vhen you are een a hole to ztop digging.    Ze vay he eez going, he vill end up in Zpain!   

Although on zecond thoughts, zhat might not be zuch a bad theeng, as I vill be zhere, vaiting vor heem.  Ha ha ha!

RB

FB latest not good reading. Still a sell they say?

Insert

Recent data points on Spark NZ (SPK) show a continued loss of market share in the important mobile market. 4Q25 data from Telcowatch saw SPK lose an estimated -20bp of market share versus 3Q25 across its main Spark and Skinny brands, taking its estimated connection share to 38.1%. 2degrees continues to be the telco gaining share, with One NZ broadly stable. This data is corroborated by rankings on the Apple App Store. SPK's average ranking has remained 10th over 1H26 (in line with 2H25) but is a record low and below both One NZ (7th) and 2degrees (3rd). This continued loss of market share is disappointing given SPK has increased its investment in marketing over 2025 and, as indicated by SPK (and seen in the data), it had a solid new iPhone launch period during August to September 2025

Spark confirms sale of 75% of its Data Centre Business.....

https://www.nzx.com/announcements/466723

Happy to leave it to holders to comment.

Quote from: Left Field on Jan 30, 2026, 10:23 AMSpark confirms sale of 75% of its Data Centre Business.....

https://www.nzx.com/announcements/466723

Happy to leave it to holders to comment.

A good move to reduce stake in datacenter business and sell non-core assets as a means to getting the balance sheet back into shape. Management also embarking on a big cost-out programme that is expected to deliver savings of $150-$180m.
 I regard SPK as being oversold and undervalued and happy to hold and receive probably 15-17c dividend which is about a 7% return on current prices. Morningstar only yesterday rated SPK as a buy with a valuation of $3.60. Other agencies are less positive so make of that what you will.
 Management clearly took their eye of the ball and have acknowledged their mistakes and I think they will get back on track in the not too distant future, particularly if there's a change of this austerity-minded Government who are underinvesting in IT along with everything else.

Quote from: Left Field on Jan 30, 2026, 10:23 AMSpark confirms sale of 75% of its Data Centre Business.....

https://www.nzx.com/announcements/466723

Happy to leave it to holders to comment.

Gotta fund future dividend payments somehow

Quote from: entrep on Jan 30, 2026, 01:30 PMGotta fund future dividend payments somehow

Plenty of analysis out there that show 15-17c is sustainable from on-going operations.

8 years ago they earned EPS of 20 cps.
If they make consensus forecast in 2026 they will earn just 13.5 cps. Taking into account 8 years of inflation EPS has nearly halved ! This sale will allow the dividend charade to continue for a while longer.

From Morningstar:

The bottom line: We retain our fair value estimate of NZD 3.60 (or AUD 3.30) for narrow-moat-rated Spark New Zealand. Shares are materially undervalued, reflecting market scepticism of the cost-out program and management's ability to refocus on core connectivity businesses. At a broad level, however, Spark is a defensive company with scale advantages in a rational three-player mobile market. Its strategy to refocus on core connectivity and reduce costs is likely to succeed, and support a maintainable annual dividend of NZD 0.15 per share. Our forecasts are unchanged. We expect Spark's first-half performance for fiscal 2026 to show progress toward meeting management's full-year EBITDAI guidance of NZD 1.01 billion to NZD 1.07 billion. We forecast EBITDAI of NZD 1.05 billion.

Long view: SPK-30 is designed to refocus Spark on its core connectivity business and improve returns. Investors will be watching closely to see if the company is on track to lift group ROIC toward the 10%-13% target by fiscal 2030, from 8.7% in fiscal 2025. We forecast ROIC to be close to 13% by fiscal 2030.

Looks like FB was right as it continues its downwards track. I think it's too hard to determine what the share is worth until we see the results coming up shortly.

FB latest note out today still a sell. 1H26E divi at 8 cps. NPAT $93m

Never been a holder, but starting to watch.

This is a very easy company to value as there is no growth.  Take next years earnings and multiply that by 8.5.  When this was $3 and the consensus from analysts was that it was worth $4, there were only 2 people on this thread pointing out the no growth, Ferg and I.  I called it as being worth no more than $2 to much consternation from some holders, some of whom had insisted it was a great bargain at $4.50 about 2 years ago. I was right.

I'll put it this way, the only dog's I like have tails and four legs.
This has all the classic hallmarks of a dividend trap. 
Never held but could be interested if it halves again and goes down to 7 times EPS of 13.55 cps = approx $1.
I still believe the analysts have this very badly wrong with an average price target of $2.87
https://www.marketscreener.com/quote/stock/SPARK-NEW-ZEALAND-LIMITED-6492600/finances/
Buying down trending dividend traps is almost a guaranteed way to gain dividend income but its paid for out of capital losses.

Quote from: Basil on Feb 11, 2026, 09:54 AM.. there were only 2 people on this thread pointing out the no growth, Ferg and I.

Sorry, but this is simply not true !????

Perhaps your memory is failing..... there have been many other posters including COD, Waltzing, L.Lizard, KW and myself......all  warning on SPK for a long  time.

Just saying.

Fair enough. 

I almost spat my coffee out reading this absolutely savage call :D

Quote from: Basil on Feb 11, 2026, 09:54 AMNever held but could be interested if it halves again and goes down to 7 times EPS of 13.55 cps = approx $1.

Yep, there were plenty of people who were pressing the alarm button when Spark went from $5 to $4 to $3 to $2.

Unlike others though I think $2 was the bottom. We'd better all go home if NZ's NO.1 telecommunications company could be worth only $1 per share.
 
As for the downtrend - well it depends when you start you start plotting your graph doesn't it? Three weeks ago Spark was in an uptrend reaching $2.34 from memory. The current slip is mainly due to investor nervousness surrounding the mid-year results on 18/2. Those results aren't likely to be great for those thinking short-term, but long term investors will be looking for signs that the cost cutting, selling of non-core assets and re-focussing on their connectivity business is starting to bear fruit.

I don't think SPK is a dividend trap at all - the numbers have been crunched and 15-17c is sustainable whilst the restructuring goes on. Should that be successful then I see Spark moving slowly up to a target price (Morningstar) of $3.60. How long that will take is anyone's guess, but the yield is attractive and, as I say, sustainable in the meantime.

Quote from: LoungeLizard on May 15, 2024, 09:00 PMThat's sort of what I'm saying - the quite extraordinary dip in the SP of infrastructure stock has very little to do with company performance or prospects, mostly to do with foreign investment sentiment. So yes, I'd agree  - this is great buying opportunity for companies like Spark. I've been topping up  and my average price is now $4.50, which is an absolute steal in my opinion.

Less than 2 years ago you were proclaiming SPK as an "absolute steal" at $4.50.   Just as well there's no chance of it halving again...or maybe there is...
Substantial capital destruction is what happens when you fall in love with a down trending dog. 

Quote from: Basil on Feb 11, 2026, 12:33 PMLess than 2 years ago you were proclaiming SPK as an "absolute steal" at $4.50.   Just as well there's no chance of it halving again...or maybe there is...
Substantial capital destruction is what happens when you fall in love with a down trending dog. 

All true, and I hold my hand up to that as have others. At the time it seemed like a market over-reaction to a bad set of results but then they dropped out of a few index's plus there was a bit of market manipulation going on as well as I recall.
But the past is the past. Looking forward I don't hold with your view that Spark will fall to $1. I don't think there would be many who would think that to be honest.F rom a base of $2 I see only one direction over the next few years - up. My average price is still well north of here, so theres little sense for long term holders like myself to sell and crystallise their losses, not when they're getting a reasonable yield in the meantime.
Re-convene in 2-3 years time?

Quote from: LoungeLizard on Feb 11, 2026, 12:54 PMBut the past is the past. Looking forward I don't hold with your view that Spark will fall to $1.

To be crystal clear I'm not forecasting it will get to $1.  I just said it would need to get there to create some interest for me. 8.5 times next years earnings of about 15 cps = $1.27 which is all I think Spark are really worth. 

Quote from: LoungeLizard on Feb 11, 2026, 12:54 PMAll true, and I hold my hand up to that as have others. At the time it seemed like a market over-reaction to a bad set of results but then they dropped out of a few index's plus there was a bit of market manipulation going on as well as I recall.
But the past is the past. Looking forward I don't hold with your view that Spark will fall to $1. I don't think there would be many who would think that to be honest.F rom a base of $2 I see only one direction over the next few years - up. My average price is still well north of here, so theres little sense for long term holders like myself to sell and crystallise their losses, not when they're getting a reasonable yield in the meantime.
Re-convene in 2-3 years time?

IMO its better to buy into a definite uptrend ( ie change of market sentiment)  than tie good money up while waiting for the 'bottom'. 

The fact that your holding has already 'depreciated' and "is worth well north of here" (as you say) is exactly the warning many of us were trying to signal.

So good luck with your investment.

Personally I would rather wait for TA to turn around before investing in SPK.

Quote from: Left Field on Feb 11, 2026, 04:02 PMIMO its better to buy into a definite uptrend ( ie change of market sentiment)  than tie good money up while waiting for the 'bottom'. 

The fact that your holding has already 'depreciated' and "is well north of here" (as you say) is exactly the warning many of us were trying to signal.

So good luck with your investment.

Personally I would rather wait for TA to turn around before investing in SPK.

Fair enough, horses for courses. I'm not one for using TA as the main determinant for buying/selling a stock, but there's many who clearly do and if it works for them then keep going. Not sure if Buffet is a TA monster - I rather think not.

One of the investing truisms is that it is about time in the market. I'm not thrilled obviously that Spark is in the red, but I've been here many times. Just about every infrastructure or "blue chip" stock I have held, has at one time or another had a year or two of decline. Admittedly not as severe as Spark, which is pretty much unprecedented. But I have always tried to look beyond the "event" and resisted the temptation to panic sell. If anything, accumulating in the dips has worked well for stocks like IFT.

Look at the 5 year charts of FPH, MFT, IFT, AIA etc. There's some sharp falls and corrections there but in the main, the line goes up over time.

In times of decline - whether it is a market correction, a poor set of results or a black swan event - you need to ask yourself is the company fundamentally the same as it was when you invested. ie what is it's intrinsic value beyond whatever has led to the downward trend. For some companies eg FBU, WHS the answer comes back no, it's not the same company as 10 years ago or even 5. Both those companies are, in my view, terminally ill for a whole raft of reasons. The others I mentioned have never once made me feel that they are in some sort of fundamental decline. If they were, I would certainly sell, but they are not. I include Spark in that.

Hindsight is a fine thing. Of course it would have been better to have sold Spark at $4.50 and bought back in now. But when the TA was against FPH and AIA (or even IFT at the moment) one could have argued the same thing, sold, and then watched the share price recover and have sellers regret. This happens time and time again - all stocks have a negative cycle at some stage. The question is whether it is temporary or permanent. For most big stocks, particularly those providing essential services, the answer is that it's usually temporary.

 Most of my stocks form part of my 20 year pension plan. I'm half way there and 90% of my stocks have grown just fine. Spark is the only one in the red, but even now - just off the bottom - I'm fine about continuing to hold becasue A) I get an ok yield (approx 5% against my average price) and B) Spark is still intrinsically the same company I invested in years ago, albeit having to fight harder for market share.

None of this will mean much for those with a short time frame, chasing a maximised dividend. Spark is the wrong stock for those on different strategy but that doesn't make it wrong stock for everyone in all circumstances.

There's an interesting analysis on the other channel.

Quote from: Buzz on Feb 11, 2026, 05:44 PMThere's an interesting analysis on the other channel.

Yes, interesting AI analysis. The takeaway is that although OPUS  considers there are a few flaws in Snoopy's analysis leading to an over optimistic view, OPUS concludes that:

1. FY2026: ~16-17cps likely achievable (data centre proceeds provide buffer)

2. Reasonable fair value range: $2.50-$3.50 based on reduced but sustainable dividends, an appropriate equity discount rate of 8-9%, and modest recovery expectations.

Not unsurprisingly any movement up or down in the dividend or SP OPUS puts down to whether the wider NZ economy recovers. Could be said for a lot of stocks.

It's an interesting and valuable  assessment but needs to be taken with a pinch of salt. AI is only looking at data that is already known - it can't predict the future with any more certainty than us humans!

Quote from: LoungeLizard on Feb 11, 2026, 05:15 PM..... I'm not one for using TA as the main determinant for buying/selling a stock, but there's many who clearly do and if it works for them then keep going.

Just FYI I would never advocate using TA as the main determinant for investing in the sharemarket......however I find it very, very useful as a guide for timing aquisitions/sales.

TA is particularly useful in signalling a change in sentiment in a beaten down stock. TWR and HGH were recent examples where I've used TA with success ( but alway's backed by FA to help guide me to the future returns potential.)

If you are wanting to quit or reduce a stock holding, TA is a useful tool to help get your timing right.

So definitely not a tool to be used as a 'main determinant', but definitely a useful tool.

JMHO. Each to their own.

Will be interesting as to what the market thinks of the result.

Divi 8 cps 50 % imputed and NPAT $64m (adjusted $73m) 63 % gearing.

Guidance reaffirmed.

FB had forecasted 1H26E divi at 8 cps. NPAT $93m

Quote from: Shareguy on Feb 18, 2026, 08:56 AMWill be interesting as to what the market thinks of the result.

Divi 8 cps 50 % imputed and NPAT $64m (adjusted $73m) 63 % gearing.

Guidance reaffirmed.

FB had forecasted 1H26E divi at 8 cps. NPAT $93m

Here's today's market release

https://api.nzx.com/public/announcement/467668/attachment/462481/467668-462481.pdf

Plus more detailed investors presentation.... https://api.nzx.com/public/announcement/467668/attachment/462497/467668-462497.pdf

Let's hope the worst is over for SPK holders.  (As a non holder interested bystander my quick take concern would be SPK's  revenue growth.)

An encouraging set of results in my view. Total revenue has stabilised, NPAT and EBITDA up and first half dividend of 8c is what we expected. Another highlight is the small growth in mobile revenue, which reverses period on period decline,  together with significant cost saving.
Looks, at first glance, to be a promising set of results. Let's see how the market views it.

Insert from Craig's latest note on the result

SPK have retained their FY guidance, but as noted this includes asset sale gains. Typically these have run at $25-30m pa, so with $24m in 1H it suggests the abnormal adjustment likely for the FY guidance may be bigger than we had previously expected.  Consequently we would view it as a downgrade to 'Normalised' guidance.

They need to get their debt down. Pre abnormals EPS 2.8 cps and a divi of 8 cps.

Quote from: Shareguy on Feb 18, 2026, 03:06 PMThey need to get their debt down. Pre abnormals EPS 2.8 cps and a divi of 8 cps.

[/b]
That's madness and with only a 50% level of imputation now.

Quote from: Basil on Feb 18, 2026, 03:13 PM[/b]
That's madness and with only a 50% level of imputation now.

Agree. I see a dividend trap and with 50 % imputation. I suspect though a lot of people will think it's a great result. Will be interesting to see FB take on this.

Quote from: Shareguy on Feb 18, 2026, 03:06 PMInsert from Craig's latest note on the result

SPK have retained their FY guidance, but as noted this includes asset sale gains. Typically these have run at $25-30m pa, so with $24m in 1H it suggests the abnormal adjustment likely for the FY guidance may be bigger than we had previously expected.  Consequently we would view it as a downgrade to 'Normalised' guidance.

They need to get their debt down. Pre abnormals EPS 2.8 cps and a divi of 8 cps.

Well, they have identified that to be fair. Net debt is 5% lower not counting the partial data-centre sale whose proceeds will bring debt back from 2.2x debt/EbITDAI leverage ratio to a more conventional 1.7x.

Quote from: Shareguy on Feb 18, 2026, 03:30 PMAgree. I see a dividend trap and with 50 % imputation. I suspect though a lot of people will think it's a great result. Will be interesting to see FB take on this.

I don't think it is great result but I don't think the market was expecting it to be. There are however a number of metrics that are now going in the right direction although there's some way to go yet. Against the backdrop of a recessionary economy and a Government that doesn't want to invest in IT or digital services (or indeed anything) it's a good result. Green shoots as they say.

Not a dividend trap as you suppose. As has been demonstrated, the current level of 15-17c is sustainable. Thats a reasonable yield I feel for a defensive stock with prospects. FB don't like Spark , Morningstar are more bullish. Take your pick.

If the dividend is sustainable at 16 cps with 50% imputation credits, (and that's a huge "IF" in my opinion), that's 18.6 cps gross and an 8.7% gross yield on today's closing price of $2.13.   Surely anyone looking objectively at this as a dividend hound should be wondering how much longer they can keep selling assets to pay unsustainable level's of dividends that exceed normal earnings per share ?   You'd think a prudent forward looking board would cut the dividend to 60-70% of ordinary earnings per share and reinvest the rest for growth and / or get on top of their debt mountain ?  Why aren't they doing that ?
Page 16 EPS from continuing operations 2.9 cps.  https://api.nzx.com/public/announcement/467668/attachment/462497/467668-462497.pdf

Spark have confirmed guidance FCF as being between $290-$330m) so ($290m->$330m)/1,890.1m shares = 15.3->17.5cps.
 So if you believe Sparks guidance figures, then yes, the current, attractive yield is sustainable.

For what it's worth, Morningstar's latest assessment based on the interim result:

Event analysis:

Spark New Zealand Earnings: Cost Cuts Stabilize Performance; Core Focus to Regrow Earnings

Spark reported a 5% lift in first-half fiscal 2026 adjusted EBITDAI to NZD 457 million, excluding the recently sold data center unit, on a revenue fall of 1% to NZD 1.9 billion. The interim dividend per share of NZD 0.08, 50% imputed, is down 36%. Fiscal 2026 guidance was reaffirmed on all metrics.

Why it matters: The in-line result arrests the negative earnings cycle, which began in the second half of fiscal 2024. Despite tepid top-line performance, the benefits of cost-cutting efforts are flowing through, with first-half operating expenses down 10%, or NZD 51 million, from a year ago. The high end of management's NZD 30 million-NZD 50 million cost-reduction target for fiscal 2026 has been achieved in the first half. But more marketing, new technology delivery, and inflation will consume some of the savings in the second half, thwarting a full-year guidance upgrade. Still, the reiterated fiscal 2026 EBITDAI guidance of NZD 996 million-NZD 1,056 million, excluding data centers, implies stabilization. Commitment to further cost cuts has not wavered, with an annualized savings target of NZD 110 million-NZD 140 million by end-fiscal 2027 intact.

The bottom line: We retain our forecasts and fair value estimates of NZD 3.60 and AUD 3.10. We project flat fiscal 2026 EBITDAI of NZD 1,049 million, excluding data centers, laying the foundation for a recovery as Spark pursues a "focus on core, shed the rest" strategy. That foundation is supported by a rapidly deleveraging balance sheet. Net debt/EBITDAI is projected to fall to our estimated 1.7 by the end of fiscal 2026, from 2.2 currently, due to NZD 453 million proceeds from selling 75% of the data center unit in January 2026. As such, shares in narrow-moat Spark are materially undervalued. With free cash flow on track to rise by 20% in fiscal 2026, our full-year forecast DPS of NZD 0.16 looks secure, even prior to earnings growth from fiscal 2027. At current prices, that equates to an attractive yield of 7%-plus.

Quote from: LoungeLizard on Feb 19, 2026, 10:10 AMFor what it's worth, Morningstar's latest assessment based on the interim result:

Event analysis:

Spark New Zealand Earnings: Cost Cuts Stabilize Performance; Core Focus to Regrow Earnings

Spark reported a 5% lift in first-half fiscal 2026 adjusted EBITDAI to NZD 457 million, excluding the recently sold data center unit, on a revenue fall of 1% to NZD 1.9 billion. The interim dividend per share of NZD 0.08, 50% imputed, is down 36%. Fiscal 2026 guidance was reaffirmed on all metrics.

Why it matters: The in-line result arrests the negative earnings cycle, which began in the second half of fiscal 2024. Despite tepid top-line performance, the benefits of cost-cutting efforts are flowing through, with first-half operating expenses down 10%, or NZD 51 million, from a year ago. The high end of management's NZD 30 million-NZD 50 million cost-reduction target for fiscal 2026 has been achieved in the first half. But more marketing, new technology delivery, and inflation will consume some of the savings in the second half, thwarting a full-year guidance upgrade. Still, the reiterated fiscal 2026 EBITDAI guidance of NZD 996 million-NZD 1,056 million, excluding data centers, implies stabilization. Commitment to further cost cuts has not wavered, with an annualized savings target of NZD 110 million-NZD 140 million by end-fiscal 2027 intact.

The bottom line: We retain our forecasts and fair value estimates of NZD 3.60 and AUD 3.10. We project flat fiscal 2026 EBITDAI of NZD 1,049 million, excluding data centers, laying the foundation for a recovery as Spark pursues a "focus on core, shed the rest" strategy. That foundation is supported by a rapidly deleveraging balance sheet. Net debt/EBITDAI is projected to fall to our estimated 1.7 by the end of fiscal 2026, from 2.2 currently, due to NZD 453 million proceeds from selling 75% of the data center unit in January 2026. As such, shares in narrow-moat Spark are materially undervalued. With free cash flow on track to rise by 20% in fiscal 2026, our full-year forecast DPS of NZD 0.16 looks secure, even prior to earnings growth from fiscal 2027. At current prices, that equates to an attractive yield of 7%-plus.

It reads as a memo designed to justify maintaining an existing rating rather than one that deeply interrogates whether the recovery assumptions will actually play out. The revenue decline, imputation deterioration, and competitive pressures deserve more attention than they receive.

The in-line result arrests the negative earnings cycle - post LL (Morningstar)

Note the phrasiology "arrest" not reverse - so in other words holds the current EBIT and hope for easier times, which in my opinion will never arrive due to legacy, competition and moribund administration.

Quote from: entrep on Feb 19, 2026, 11:14 AMIt reads as a memo designed to justify maintaining an existing rating rather than one that deeply interrogates whether the recovery assumptions will actually play out. The revenue decline, imputation deterioration, and competitive pressures deserve more attention than they receive.

I suspect you have to pay for a deeper analysis along the lines you suggest, Entrep. Also, at the end of the day we go on our own instincts/analysis. No one should follow what agencies say one way or the other.

Also I think you are being unrealistic if you think anybody can say with any certainty whether "the recovery assumptions" will play out. A lot of that will depend on the recovery in the wider NZ economy and also in a change of Government policy.

Broadly speaking though the numbers are trending in the right direction. And the dividend is both attractive and sustainable in the meantime. Good enough me to consider Spark as a HOLD, if not perhaps a BUY. 

Ex-div today, 8c 50% imputed

Gosh it's been a while since I looked at this. $1.92 and still dropping. The Board needs to go. Confirmation that selling the data centres and then buying back shares was another value destroyer for share holders. Forbar claim that still loosing market share.

I wonder how much of the decline here is related to fears about satellight internet, similar to how the SaS sector got hammered by AI fears recently

Quote from: Basil on Oct 01, 2024, 05:21 PMIn the last decade the low point is $2.63 in May 2015.  Holders will be hoping it doesn't test or really hoping it doesn't break down below that level.

Post from October 2024.  Since then the SP has dropped below $2 and the outlook for profits and dividends has worsened.

Quote from: Shareguy on Jun 02, 2026, 03:56 PM$1.92 and still dropping. The Board needs to go.

I agree there is something not quite right with the Board.  In no way shape or form would the CFO (who fell on his sword or was pushed) be solely responsible for the monumental cock-up that was the buyback.  No CFO in NZ gets to spend $305m without oversight.

Except from closing market commentary today.

QuoteA setting sun

Spark was the most heavily traded stock on the day with a volume of almost 4.5 million shares, falling 2.5% to a 15-year low $1.775. Australian telco Telstra was also weaker with the sector coming under growing scrutiny from the impact of low orbit satellites, and S&P Global today said Alphabet would replace Verizon in the blue-chip Dow index.

Quote from: Basil on Jun 24, 2026, 11:22 PMExcerpt from closing market commentary today.

"A setting sun

Spark was the most heavily traded stock on the day with a volume of almost 4.5 million shares, falling 2.5% to a 15-year low $1.775. Australian telco Telstra was also weaker with the sector coming under growing scrutiny from the impact of low orbit satellites, and S&P Global today said Alphabet would replace Verizon in the blue-chip Dow index."

A vairly zilly piece of commentary re Zpark I theenk.

How can zending expensive telecoms equipment by rocket into a low space orbit vhere it can't be zerviced and vhere it vill burn up on re-entry 'after 3-5 years or zo', be 'cheaper' zhan activating a pre-existing vibre cable zhat already runs to your house?  Whoever wrote zhat has been paying too much attention to Elon.

The other obvious vlaw een thees commentators thinking:   Zpark does not own ze terrestrial broadband network - Chorus does.   Zo even eef eet eez zomehow possible vor Zatellite connection to be cheaper, Zpark can zimply zwitch wholesale zupplier vrom Chorus to ZpaceX (or whoever).   It makes no deeference to Zpark who vins zhis technology var.

RB

Quote from: Red Baron on Jun 25, 2026, 09:06 AMA fairly silly piece of commentary re Spark, I think.

How can sending expensive telecoms equipment by rocket into low Earth orbit, where it can't be serviced and where it will burn up on re-entry "after 3–5 years or so", be cheaper than activating a pre-existing fibre cable that already runs to your house? Whoever wrote that has been paying too much attention to Elon.

The other obvious flaw in this commentator's thinking: Spark does not own the terrestrial broadband network — Chorus does. So even if it is somehow possible for a satellite connection to be cheaper, Spark can simply switch wholesale supplier from Chorus to SpaceX, or whoever. It makes no difference to Spark who wins this technology war.

RB

I think satellite is clearly a threat to Spark, not something to dismiss.

Starlink NZ is already offering unlimited 100 Mbps broadband for $85/month. Spark's comparable unlimited Everyday Fibre plan is $91/month, rising again soon?

And Starlink is not loss making anymore, SpaceX's Connectivity segment did around US$11.4b of revenue in 2025, with roughly 39% operating margins and 63% adjusted EBITDA margins.

Yes, the satellites need replacing after a few years. But that is not a killer argument if the business is already producing those kinds of margins while investing heavily in growth.

The bigger question is: why would SpaceX even need Spark for broadband? Starlink is already direct-to-consumer. Spark may be useful for satellite-to-mobile, where spectrum, billing and phone plans matter. But for home broadband, the risk is that Spark gets bypassed entirely.

Quote from: allfromacell on Jun 26, 2026, 10:58 AMI think satellite is clearly a threat to Spark, not something to dismiss.

Starlink NZ is already offering unlimited 100 Mbps broadband for $85/month. Spark's comparable unlimited Everyday Fibre plan is $91/month, rising again soon?

Cost of Starlink Kit (for zetting up Starlink) eez $599 een N.Z. .  Zo not cheap to 'zet up'.

QuoteStarlink is not loss making anymore, SpaceX's Connectivity segment did around US$11.4b of revenue in 2025, with roughly 39% operating margins and 63% adjusted EBITDA margins.

Yes, the satellites need replacing after a few years. But that is not a killer argument if the business is already producing those kinds of margins while investing heavily in growth.

The bigger question is: why would SpaceX even need Spark for broadband? Starlink is already direct-to-consumer. Spark may be useful for satellite-to-mobile, where spectrum, billing and phone plans matter. But for home broadband, the risk is that Spark gets bypassed entirely.

SpaceX prospectus:
https://content.spacex.com/cms-assets/FINAL_Documents%20and%20Updates/SpaceX%20-%20EU%20Prospectus%20(Approved%20by%20Bafin)%20-%20June%205,%202026.pdf


p101
"We monetize Starlink primarily through subscription plans paired with hardware sales."

p60
"We charge our Starlink Subscribers a monthly subscription fee, which varies based on geographic market and download speed, plus typically a one-time upfront terminal cost."

'Connectivity' EBIT = $4.423b

Apparently 'depreciation' vas included een ze 'Cost of revenue' (total $5.921b), but not zeperately deesclosed. (Refer p142 of prospectus)

Go to zection 5.8 vor ze 'Consolidated Results' (plus zection 5.8.2.2 vor 'Connectivity')

Connectivity accounts yor $11.387b/$18.674b = 61.0% of operations.

Net interest bill vor SpaceX = $1.945b - $0.492b = $1.453b
Connectivity zhare of SpaceX total eez 0.618 x $1.453b = $0.886b

Zo NPBT vor 'SpaceX connectivity' eez $4.423b-$0.886b = $3.587b
ne

21% 'US Vederal Tax Rate' suggests NPAT of 0.79 x $3.587b = $2.834b

Zo 'Starlink' 'Net profit Margin' (connectivity) for FY2025/CY2025 vas: $2.834b/$11.387m = 24.9%

Broadband revenue at Zpark for FY2025 vas $608m (eencluding 'een house vireless broadband' which is lower cost. $608m made up $688m/$3,623m = 16.8% of all revenue.  Apart from rural areas, zo far Zpark has not zeen zignificant market share loss to Starlink.

RB

Quote from: Red Baron on Jun 26, 2026, 04:45 PMCost of Starlink Kit (for zetting up Starlink) eez $599 een N.Z.

No it's not, it used to be. I've recently moved from OneNZ to Starlink for Broadband service, the kit was supplied free of charge (sat-receiver and house mountings, modem/router, power block, 15m CAT6 cable), a kind of zero cost rental arrangement, i.e. supposed to return it if you cancel your sub. In my case I doubled my previous down/up-load speeds (from a VDSL service) and the service has been rock solid reliable, at about 30% saving in my monthly costs.

Quote from: Red Baron on Jun 26, 2026, 04:45 PMSpaceX prospectus: "https://content.spacex.com/cms-assets/FINAL_Documents%20and%20Updates/SpaceX%20-%20EU%20Prospectus%20(Approved%20by%20Bafin)%20-%20June%205,%202026.pdf" (https://content.spacex.com/cms-assets/FINAL_Documents%20and%20Updates/SpaceX%20-%20EU%20Prospectus%20(Approved%20by%20Bafin)%20-%20June%205,%202026.pdf)

p.101:

"We monetize Starlink primarily through subscription plans paired with hardware sales."

p.60:

"We charge our Starlink Subscribers a monthly subscription fee, which varies based on geographic market and download speed, plus typically a one-time upfront terminal cost."

Connectivity EBIT = $4.423b.

Apparently depreciation was included in cost of revenue, total $5.921b, but not separately disclosed. Refer to section 5.8 for the consolidated results and section 5.8.2.2 for Connectivity.

Connectivity accounts for $11.387b / $18.674b = 61.0% of total revenue.

Net interest bill for SpaceX = $1.945b - $0.492b = $1.453b.

Connectivity's pro-rata share of SpaceX net interest = 61.0% x $1.453b = $0.886b.

So NPBT for SpaceX Connectivity is $4.423b - $0.886b = $3.537b.

A 21% US federal tax rate suggests NPAT of 0.79 x $3.537b = $2.794b.

So the estimated "Starlink" net profit margin, using Connectivity as the proxy, for CY2025 was:

$2.794b / $11.387b = 24.5%.

Broadband revenue at Spark for FY2025 was $608m, including in-house wireless broadband, which should be lower cost. $608m made up $608m / $3,623m = 16.8% of operating revenue.

Apart from rural areas, so far Spark does not appear to have seen significant market share loss to Starlink.

I think your numbers are wrong, but even if they're not you're not really proving the bear case wrong.

If Spark has a worse product that costs more they will bleed market share over time. Starlink has only very recently started aggressively marketing their service in NZ.

A very clear bull trap imo.

Quote from: allfromacell on Jun 26, 2026, 06:11 PMA very clear bull trap imo.

More a dividend trap imo, and that with the uncertainty whether the dividend can be sustained. Been like that for a while, day of reckoning may be closer than some acknowledge, on top of their capital having been decimated. Lots of passive hold investors getting ruined with this company.

Quote from: Buzz on Jun 26, 2026, 06:37 PMMore a dividend trap imo, and that with the uncertainty whether the dividend can be sustained. Been like that for a while, day of reckoning may be closer than some acknowledge, on top of their capital having been decimated. Lots of passive hold investors getting ruined with this company.

Agree. I was in the Spark corporate box years ago watching the rugby and having a beer with some of the Spark executives. They were talking about how to improve the business and I said to them I know the answer to that question and it can save you an awful lot of money on marketing. " Answer the fn phone" true😂

Quote from: allfromacell on Jun 26, 2026, 06:11 PMI think your numbers are wrong, but even if they're not you're not really proving the bear case wrong.

I gave you zee reference.  Eef you theenk I have made a mistake zhow me....

Quote from: allfromacell on Jun 26, 2026, 06:11 PMIf Spark has a worse product that costs more they will bleed market share over time. Starlink has only very recently started aggressively marketing their service in NZ.

A very clear bull trap imo.

Vibre broadband eez not a vorse product.  Eet can't be.  Latency eez not eemproved by zending a zignal eento zpace.  Although I vill acknowledge zhat vith Starlink LEO zatellites, ze difference eez zo zmall zo as not to be noteecable een most applications.

RB

Quote from: Buzz on Jun 26, 2026, 05:22 PMNo it's not, it used to be. I've recently moved from OneNZ to Starlink for Broadband service, the kit was supplied free of charge (sat-receiver and house mountings, modem/router, power block, 15m CAT6 cable), a kind of zero cost rental arrangement, i.e. supposed to return it if you cancel your sub.

O.K.,zhanks, good to know

Quote from: Buzz on Jun 26, 2026, 05:22 PMIn my case I doubled my previous down/up-load speeds (from a VDSL service) and the service has been rock solid reliable, at about 30% saving in my monthly costs.

Not zurpising.  VDSL eez not vibre.

RB

Quote from: Red Baron on Jun 26, 2026, 07:04 PMO.K.,zhanks, good to know

Not zurpising.  VDSL eez not vibre.

RB

If you wrote in plain English Snoopy, I'd take you more seriously, otherwise it's just dumb gibberish. I don't know why you persizt with thiz nonzenze, do you zink etz funy? It's not.

Recently Spark actually sent me an email asking whether I was on the right Mobile plan. Turns out I'm not, I did look into it. I can make about 70% savings moving to a monthly pre-pay with Spark based on my usage. So I looked elsewhere, whoa! I can save even more by dumping Spark and moving to another supplier.

Credit to Spark that they asked, but pretty dumb that they didn't follow up with a 'special' offer for me that beat out the competition. 

This imo is a company going backwards, fast. Investors are already caught in a dividend trap, with no evidence that dividends are sustainable, or that their capital will not be decimated further than it has already.

Agree with Buzz, this has been a divvy trap for ages, plain as day . $85 a month for 100 mb/sec satellite broadband with Starlink with no set up costs is very attractive for all those not on fiber.

If Starlink was a threat then wouldn't CNU be suffering? Instead it's near ATH.

Starlink have only very recently dropped the set up costs which was originally about $1000 from memory, then dropped to about half that and now the equipment cost is free. Likely to start attracting significant market share from here I reckon.

Quote from: Buzz on Jun 26, 2026, 07:50 PMIf you wrote in plain English Snoopy, I'd take you more seriously, otherwise it's just dumb gibberish. I don't know why you persizt with thiz nonzenze, do you zink etz funy? It's not.

Baa baa, You really pezist vith zhis myth zhat I am zhat piece of 'unmentionable doggy do'?  Vhen eet eez obvious I am heez arch nemesis?

Vell I vill tell you sometheeng.  Last dogfight we met, he called me a "Cabbage brained sour Kraut."   I zimply retorted zhat I thought he vas a 'vool'.   Zo ve do at least have a kind of 'mutual respect', eef you can call eet zhat.   

I do not tolerate 'vools', except my good grace on Christmas eve means zhere eez zhat vone day in ze year my Christmas spirit overrides my common zense.   (plus I do get to read zhose zecret ztock research papers vrom zhat overhyped hound dog's satchel vhile he eesn't looking- heh, heh!)   

Anyways zhis 'sour Kraut' has managed keep zhat 'pompous pooch' out of zhis vorum so var, vhich I am sure eez zomething many on here zelebrate!

RB

Quote from: entrep on Jun 26, 2026, 08:11 PMIf Starlink was a threat then wouldn't CNU be suffering? Instead it's near ATH.

I'd read it as shouldn't rather than wouldn't
or perhaps the market is all knowing and all seeing umm not sure I believe that.
I would be SELL on CNU today expressing it differently.

Personally I've this month moved to Starlink, $85 plan for 3 months promo price of $55.10, plus $19.10 freight on the set-up. Still to resolve the mounting as Starlink shop looks a bit expensive for what I need. Previously had a Fibre offering off a localised Rural ISP by Air ( akin to terrestrial TV for simplicity of comprehension) as I have no copper or fibre within 12km of my residence. Say six months ago it would've been $599 set-up and $120 odd monthly for a somewhat lesser bandwidth with Starlink. 20 days in and I'm a Starlink fan even if I can't say much positive of Elon Musk.

Quote from: Otago K on Jun 27, 2026, 07:44 AMPersonally I've this month moved to Starlink, $85 plan for 3 months promo price of $55.10, plus $19.10 freight on the set-up. Still to resolve the mounting as Starlink shop looks a bit expensive for what I need. Previously had a Fibre offering off a localised Rural ISP by Air ( akin to terrestrial TV for simplicity of comprehension) as I have no copper or fibre within 12km of my residence. Say six months ago it would've been $599 set-up and $120 odd monthly for a somewhat lesser bandwidth with Starlink. 20 days in and I'm a Starlink fan even if I can't say much positive of Elon Musk.

Quote from: Buzz on Jun 26, 2026, 05:22 PMI've recently moved from OneNZ to Starlink for Broadband service, the kit was supplied free of charge (sat-receiver and house mountings, modem/router, power block, 15m CAT6 cable), a kind of zero cost rental arrangement, i.e. supposed to return it if you cancel your sub. In my case I doubled my previous down/up-load speeds (from a VDSL service) and the service has been rock solid reliable, at about 30% saving in my monthly costs.

Above are two examples vrom vhat zound like zeni-rural properties vithout local vibre.  (note to Otago K, you can't claim to have been on 'vibre' eef ze nearest vibre cable eez 12km from your house!  It zounds like you vere on a 'vireless' broadband scheme.)

Zhese two cases are exactly ze cases vhere 'Starlink' has a place.   Zhis does not mean zhat 'Starlink' is zet to 'rum amuck' een urban environments though.  Yes eef you read Elon's 'SpaceX prospectus', he theenks he eez on ze brink of a tidal wave of 'urban switchover'.   But een ze same document he eez also claiming zhat big benefits vill vlow from hees prospective passenger zervice between ze Earth and Mars!

p52
"SpaceX .... became the first to deploy a large-scale LEO satellite-to-mobile constellation, before reaching approximately 10.3 million Starlink Subscribers in 2026."

p121
"We generally expect Starlink Subscriber ARPU to continue to decline over the next few years as the portion of our subscriber base outside North America continues to grow, as we add lower priced service plans, and as we adjust the monthly service plan fees we charge for broadband offerings. However, we expect these dynamics to be offset by increased scale and technological advancement in our launch, satellite, and user terminal operations, ultimately supporting overall revenue growth and cost reduction."

Zhis looks like 'build it and zhey vill come' economics to me.

p129
"For launches of our Starlink satellites, the Company does not recognize any inter-segment revenue, rather those launch costs are capitalized in satellites in Property, plant, and equipment, net. We allocate a significant amount of launch capacity to our Connectivity segment."

Zhis zounds good and produces a respectable net profit margin (refer post 529).

Net profit Margin' (connectivity) for FY2025/CY2025 vas: $2.834b/$11.387m = 24.9%

But vhat about ze 'non-launch costs'?  Capital to develop ze rocket design and ze on ground launch facilities?   I zuspect zhat eef you include zhose, ze 'net profit margin' vor 'Starlink communications' eez nothing like 24.9%.    Vhich eez precisely vhy Elon eez 'talking big' about zcaling up hees operations (more users over vixed cost base lowers costs per user).

I remain unconvinced, especially as I am in ze midst of zetting up my own 'flying broadband operation' een my home area - ze rural Alsace region of Germany.  I have a lot of 'Vrench rural varmers' as neighbours.  I eentend to offer a 'one hour per day discounted broadband zervice', as I do my daily one hour 'training vlight.'

Vith ze telecommunications equipment I have packed eento my Fokker Triplane, I can offer zhis at ze same time as my free 'roundup veed control' zpraying zervice, vhich offers 100% land coverage.   For zhose varmers zigning up to 'Fokker broadband', I vill voluntarily remove zhem from my veed control operations vor no charge!  Zhis business approach has been very zuccessful vor me, vith 100% of my neighbours zigning up to 'Fokker broadband'.  And I can assure you zhat ze cost of my Fokker triplance vlight program eez orders of magnitudes less zhan ze real cost of Elon firing off just one of hees rockets!

RB

Starlink becomes N.Z's largest rural ISP
Spark steadily losing market share in rural and residential area's.
https://www.nzherald.co.nz/business/starlink-becomes-nzs-largest-rural-internet-provider-as-some-local-players-suffer-tech-insider/premium/UFCCHFU64FEMLGTKRJI6Q4NMAQ/

Quote from: Red Baron on Jun 29, 2026, 09:04 AMAbove are two examples vrom vhat zound like zeni-rural properties vithout local vibre.  (note to Otago K, you can't claim to have been on 'vibre' eef ze nearest vibre cable eez 12km from your house!  It zounds like you vere on a 'vireless' broadband scheme.)
..........................

Red Baron

Yes it is wireless broadband, with aerial connection to the fibre, claimed to match the best fibre capacity bandwidth and speeds that the Chorus network can offer through the fibre network. termed as Air Fibre. It's been a journey over two and a half decades of internet from dial up at cut out levels, mobile network that throttled back over peak summer seasons offering etc, then the wireless period.
What held merit of the past might not hold such merit in the future; technology, businesses and models of business of the past are always worthy of review. Suspect that Starlink might make inroads to NZ urban; internet and telco space that will transcend what we can currently contemplate.
In my situation Starlink is currently a clear best option for internet and ancillary mobile connectivity restrictions where I spend my time in NZ.

Quote from: Basil on Jun 29, 2026, 12:57 PMStarlink becomes N.Z's largest rural ISP
Spark steadily losing market share in rural and residential area's.
https://www.nzherald.co.nz/business/starlink-becomes-nzs-largest-rural-internet-provider-as-some-local-players-suffer-tech-insider/premium/UFCCHFU64FEMLGTKRJI6Q4NMAQ/

Spark share of retail broadband still falling

Was 38% in June 21 and gone down every year to 32% now

Divie safe though