RWL's business model to date appears to be build the infrastructure with minimal upfront costs to customer and then charge annual fees based on either a fixed rate or water volume usage. Based on some of the examples given in the preso, a 5 year return of initial capital seems a reasonable assumption. Thus, if they had around $60M revenue last year, can we make an educated guess that they are carrying around 5 times that in debt, $300M?
I have no doubt management have made a great call here, but how are we supposed to trade the company's shares when we can't really value RWL? It cost us 100M shares. The deal sounds ludicrous for the revenue they bring to the table.
Happy to have my logic on the debt vigorously refuted as I'd love to increase my holdings by another 50%.
FLC Price at posting:
94.0¢ Sentiment: Buy Disclosure: Held
