Oz investors have not warmed to the UK Motor Claims bit yet. They should if SGH publishes its figures
in a way which shows margins and WIP associated with 3 elements of the enlarged group.
1. The Oz business can we assume trog along with profits and cash generation
2. The NIHL hearing loss claims business will suck in C. $200 m and then give it all back + profit
in 17 months . My understanding is that the plan is to then shrink this.
3. The really good bit you will find is the core UK Motor Claims bit which services the insurance industry
It is really profitable. It as higher margins than other legal business and lower high cost legal input.
The bad bit is debt rising ( 2 above) but we know it will pass and debt will be lower ( $500M?). Good. Low enough? Dont know. However 1 2 and 3 are materially net cash generative. I am clear that when this hiatus is over SGH can report over $300M EBITDA. Any restructure has plenty to play with and ,at a prospective PE of C. one, equity replacing some debt might limit the top end of SP prospects, but still allow expectations of $5 SP. My preference is that they just soldier on because I quite fancy $10 SP in 2-3 years and there is absolutely no reason why not.
It would be totally daft to give up on the UK potential.
Mel
...PS another 30 seconds of Andy and he would have cried. Scottish ???
well done Jamie and Gordon .....astonishing. Not used to it.
SGH Price at posting:
57.5¢ Sentiment: Hold Disclosure: Held
