This will likely end in a sale to a larger strategic like Silk Laser Australia (SLA AX), Clear Skincare (owned by API / Wesfarmers) or Laser Clinics Australia (owned by KKR) given these players can cut out virtually all of the current ~$8m run-rate of overheads overnight, which would means VTG would generate $3m in EBITDA this year and $5m next year.
Assuming the buyer pays an EBITDA multiple of 8x (what transactions in the sector have been occurring at), this gets you to a transaction value of roughly $40m, which combined with the net cash position of $40m means a fair share price of $0.45c-50c (depending on how the franking credit balance gets returned).
As a result, right now we are looking at ~100% upside with limited downside given the cash backing.
Disclosure: I am long
VTG Price at posting:
27.0¢ Sentiment: Buy Disclosure: Held
