Ann: AVA to Divest Services Division, page-28

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fcmaster26

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17/08/21

10:54

Post #: 55346216
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Originally posted by Access2020: ↑

This is an interesting one. It’s an excellent deal for management and they’ve done well for shareholders too. Our cash position is now too high and we’re over capitalised so the gain we’ve seen today includes investors preempting the capital management program that will be announced on 30 August.

Personally I think it will be a large special dividend as the liquidity of this stock is low, so they may not do a buyback even though I think that would be a better move medium term.

Overall we now screen EXTREMELY cheap on an EV/EBITDA basis, we have an exceptionally strong balance sheet and the TAM + upside remains significant.

However, I believe the risk profile went up and sold a third of my position today. The earnings are historical and IMOD will drop off so the forward looking earnings profile is now pretty much all in on aura IQ. That’s fine as it’s high margin and high IP but until they make meaningful sales it’s worth recognising that the forward earnings profile is much more uncertain now.

My strong preference would have been to keep the Services business a bit longer until Aura IQ kicked in to gear.

Either way we’re all in on Aura IQ whether you like it or not. So the impact on the SP of sales or delays in sales will be magnified in both directions. GLTAH

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What if selling the service division is a side proof of the management knowing that Aura iq is definitely going to make big fat sales figures?

AVA Price at posting: 46.0¢ Sentiment: Buy Disclosure: Held
13 Upvote

2 Great analysis

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