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28/09/21
16:32
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Originally posted by SteveSage:
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Have to agree with most of the sentiment here; the price received for ICE looks exceptionally low ICT EBITDA: - FY2019 79m - FY2020 85m - FY2021 71m I would say that there are significant expenses that are not allocated when they provided segment EBITDA (~30m in FY2019 & 2020, ~20m in FY2020); arguably this should mostly be assigned to ICT given what the VTG business does, so this could be possibly the only reason that I can see a $110m sale price in the ballpark....i.e. if 'true' EBITDA is between 50-60m, then you are looking at 100-120m value on 2 times EBITDA multiple. The notice says that the Board believe the transaction is in the best interest and with mgmt controlling ~20% of the shareholding, I see it pretty hard for other shareholders to gather 50% of the vote to challenge the board (I mean most shareholders are unlikely to even read anything and their vote likely falls with mgmt as a proxy). From my calcs, there is still some value there as a result of the franking credits: - 110m for the ICT business - 30m in cash (perhaps less by Nov given covid) => this brings ups to ~140m with no value assigned to NIMA or franking credits which is broadly in line with the current market cap If we assume they will pay out the 45c (~75m) plus 19c franking credit, then we have post a 64c fully franked div: - 65m in cash - Nima business say valued at nil => Just the cash should make the shares worth ~39c (65m cash/165m shares) Looking at it another way, the shares currently should be worth ~103c (64c dividend plus 39c cash) if you assign no value to NIMA. Having said that, fully franked dividends are not worth 100% to everyone, plus NIMA is losing money (and even more given it has to carry ~4m in mgmt salaries all by itself). The shareprice IMO is not far off reflecting all of these factors. I've also seen a few comments on NIMA....with an expected 65m in cash (and note that if they pay 39c instead of 45c they will have another 10m in cash), I suspect that the board are looking for an acquisition rather than organic greenfield growth or buying out small operators. Anyway, still percolating on whether to hold or sell
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starting to look a little silly: - dividend of 45c + 19c franking credit = ~64c - cash of ~65m after dividend payment which is ~39c per share Even if you ignore the franking credit or assign any value to NIMA, you get 84c At ~95c or above it may be marginal (i.e some may prefer a return of their investment rather than a taxable dividend and a capital loss), but at this price or below, it seems to be mispriced. Perhaps they are implying a negative value to NIMA given prior losses and the remaining NIMA business having to carry the overheads and mgmt costs, but the fall is starting to look overdone