ENA (ASX) Ann: ENA signs non-binding agreement to sell its UK operations

Originally posted by T.E.P.: ↑

"Game over for this stock as I've wrote in previous comments"
CF+, no debt, amazing balance sheet: ~$8m cash in bank, ~$2m investment in PSI
Top line growing, high-calibre team, high-margin, management buying on market etc. etc. etc.
Doesn't look like game over to me

"Further proof the board has no idea what its doing"
They have just sold the lower quality half of their business (ENA UK) at the top of the insurance cycle

"Terrible deal for a terrible price"
In H1 FY22, ENA UK did EBITDA of A$128K and EBIT of A$106K
The deal was for A$8.2m (75% cash, 25% shares)
That's a transaction multiple of 32x EBITDA and 38x EBIT(and a PE of 40x) if one annualises the H1 FY22 figures
It might look like a mediocre price on a revenue multiple (~2x) or on a p/GWP multiple (~21%) but that obscures the fact that the ENA UK business has razor-thin margins, and very heavy regulatory, systems and HR costs

"Even if the Australian business increases 5 fold, they are still worse off."
The Australian business is running at an EBITDA of $823K in H1 FY22
That's 6.4x as much profit as ENA UK; the data suggests it is the faster growing, higher quality business for ENA to focus on
If we grow ENA Aus 5x, they will be doing annualised EBITDA of $8.23m; at that point, ENA should be worth multiples of the current price
I don't understand why that scenario would be worse off than a business (ENA UK) that was marginally profitable?

"The only way out now is to sell the last asset, become a cashed shell and look for another deal."
That's not the plan
ENA Aus is at the beginning of a significant growth runway in their specialist sectors in Australia
They now have significant funds to execute on strong profitable growth
Therein lies the future of ENA

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Keep investing TEP, its your money, nothing of what Ive said so far is making any difference with you. If you think this a good deal, good luck.
Ive had my whole working life in capital markets and the insurance industry and know exactly where this stock is positioned and they now have next to no chance in delivering enough income to support a public company.
happy to have a sportsman bet that within two years it sells it aussie business and vendors a mining asset in there.