The target relates to the CIIC deal standalone, which is ADU65m over 5 years. Costs I assume are COGS plus other admin associated with it. This is just based on the CIIC deal as a standalone, with the business running on-track for $3.0m in revenues this year.
Although the average PE of the market is 15, the average forward PE for the healthcare sector (S&P/ASX 200 HealthCare index) is 25x. Rob’s use of 20x is in fact conservative from this standpoint.
What this line is saying is that if they were selling at the target rate for CIIC, and ignoring any other sales, UCM would be worth $1.40 per share. The potential of this deal let alone factoring in sustained growth of ~50% p.a. in the rest of the business of this is far from priced in. UCM’s valuation looks quite silly considering where emerging peers such as RAP, ADH and ACG are priced. It will just take some more time, exposure to investors and some definitive runs on the board through quarterly/annual reports to get that valuation gap closed.
UCM Price at posting:
25.5¢ Sentiment: Buy Disclosure: Held
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