Ann: Retention of Laundries business-SPO.AX, page-46

It dont think there needs to be much growth potential at all at these PE ratios.
There is a lot of bad news already baked into the SP, this drop is driven by short term big players that where looking for a quick buck, it doesnt reflect true market value."


@bug1 ,

Given all the debt in this business, I'm not sure using a P/E multiple is the appropriate way to value it. I think EV/EBIT or EV/EBIT, or Free Cash Flow Yield on EV are more representative valuation approaches.

And on those measures, namely 6.0x EV/EBITDA, 8.5x EV/EBIT and 12% FCF Yield, the stock appears much less undervalued, in fact, probably looks to be fairly valued, I would have thought, given the nature of the business.


"There is a lot of bad news already baked into the SP,..."

With the failed sale of the laundry business, almost $800m of Net Debt being having to be supported by some $210m to $220m of EBIT, it now looks like an equity raising is a near-certainty at some stage before long (otherwise, it will take them years to trade their way to a more manageable, less stressed balance sheet).

And until such a raising is completed, wholesale buying of the stock by institutional investors is, I think, unlikely.