Your view on Telstra (TLS) and Murray Cod (MCA)

Hi Paul,

There wouldn’t be that many Australians who disagree with you about Telstra (TLS) but as you rightly say we must take emotion out of investing.

• TLS looks good and we think, fits the bill of defensive style investments that will outperform, particularly while trade uncertainties persist.  Their FY24 results in February showed earnings growth of 6% and an increase in the dividend to 9.5c for the half, which not many in the market were expecting. This shows a higher degree of confidence from the board in the momentum of the business.  Buy backs are another positive.
• The last time Telstra made a strong move through $4 and beyond was for similar reasons – expected buybacks and capital returns, as they looked to cash in and sell their InfraCo arm back in 2023. That would have been a short-term sugar hit. This time, they’ve got the assets in hand and it’s a different story. With those assets growing revenue consistently, alongside a renewed growth in mobile segments, TLS still looks attractive to us.
• We remain long and bullish in our Active Income Portfolio with an initial target ~$4.50 but a move towards $5 would not surprise.

Murray Cod (MCA) is probably a great example of don’t ignore the tape, even if the story sounds good.

• MCA has shrunk to a $130mn fish farming business which in consistently losing money, another $21m in FY24 with free cash flow of -$31.7m, and they might be rattling the tin again with cash levels on the low side, $4.2m is what we see as at 31 Dec 24.  with total debt of $31m
• The concern for MCA in our view, is the business has flatlined over the past few years from a revenue perspective, yet costs and capital expenditure have increased, paid for by taking on more debt. For us, these financial trends are not positive.
• There is no shortage of companies on the ASX where the story always is ‘very soon’ from the company. It’s a lessen we’ve learnt, and continue to learn, whereby companies are their own greatest cheer leaders.  We can’t really blame them, it’s a necessity for smaller companies that are on shakier ground financially to consistently ‘talk up’ their business.  As investors, we must always be sceptical and try and see through the B/S – often easier said than done.

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Telstra Group (TLS)

LAST UPDATED 28/03/2025 22:18

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Telstra Group (TLS)

LAST UPDATED 28/03/2025 22:18