Tuesday, March 05, 2019

ASX MXI MaxiTRANS Industries Ltd

I am not a financial advisor. I have never worked in a bank or anywhere remotely connected to finance and investing. However, unlike many blogs that make all sorts of investment recommendations - I only review stocks I have personally had the confidence to invest in.

Ezra's Stock of The Day: MaxiTRANS Industries Ltd (ASX: MXI)

5/3/19 Purchase price: 0.335
- 52 week range: 0.335 - 0.765
- Intrinsic value from future cash flows: 1.14

ASX: MXI - Makes, designs and manufactures transport equipment. Trailer and truck parts. Freighter, Maxi-CUBE, Hamelex White, Lusty EMS, AZMEB, Peki, TraileRentals, MaxiPARTS, Maxus, and PANELMasta. Established industry leader in Australia.

Purchase Rationale:

Recent price drop from the 0.50 range to 0.34.
- likely from announced drop in NPAT (7.8m down to 1.1m.) from purchase of cashflow generating asset (Trout River Australia which puts out ~2m yearly EBITDA). Also noted slight drop in sales: 214m down to 190m.
- This is still a profitable company. Fundamentals of business have not changed. Cashflow is essentially the same.
- Recent insider trading. 2x directors purchased at 0.52 and 0.61 less than six months ago.
- @0.34, the price to book ratio is very good: PB 0.5

Dividends easily covered by earnings (49% payout ratio)
- Div 10% (trailing)
- 6.5% projected (due to recent drop in earnings)

Stable organic growth in equity past 5 years. 108m to 135m in equity 2013 to 2018
Stable debt ratios and cashflow.
Stable half yearly dividends: 2, 2, 1, 2, 1.5, 2, 1.5 (oct 2018)
Established in 1946. Company is likely to be around in 10 years time.

Diversity check: Fits well into current 2019 portfolio:
SGP REIT, diversified.
AOG Realestate focusing on Retirement Homes
UNV Coal mining
PGC Healthcare, durables.
NTD Retailing (tyre distributor)
MXI Capital goods / heavy machinery / trucks.

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