Historically 400/- for Williamson seems high BUT:
EPS was postive in a bad [low tea prices & low production due to dry conditions] year thanks to Forward Sales in 2014-15.
In 2015-16, the Forward Sales will hurt USD earnings but they will contribute to profits. A weaker KES will magnify the profits. I don't know what % of sales are sold forward or at what prices. One major advantage is lower diesel/fuel prices for the factories.
Nevertheless, Williamson has invested heavily in its factories [Cashflow Statement 2015 + Annual Report 2015] to process outgrower leaf. If Williamson can leverage the factory's production capacity it can make marginal (variable) profits which add cash profits to the bottomline.
Does Williamson buy leaf, process it and sell it under their name making money across the value chain?
Does Williamson simply process leaf into made tea for a fee? [The made tea is sold by the farmers directly]
2013 Cash Earnings: 80/Share (Dividend 7/50)
2014 Cash Earnings: 55/Share (Dividend 7/-)
2015 Cash Earnings: 11/Share (Dividend 40/-)
A good 2015-16 [or so I think] should allow for Williamson to pay another good dividend since Williamson has no significant debt & can earn 10+% in interest income from T-Bills.
I am looking at Williamson as a long-term Dividend Stock [despite the droughts or vagaries of the tea prices] as the firm has eliminated the crippling debt it took on to build (sold) Williamson House.
For those who know the farms [Changoi, Kapchorua, Tinderet & Kaimosi] do you think these can be sold off as a whole? Sub-divided and sold off? Price per acre in the area?
The book NAV is 750/share and that includes 300/- in cash [or near cash & receivables]
The largest liability is Deferred Taxation which only comes into play when the (revalued) assets are sold.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett