The company looks solid & growing alot faster than $SSM. Higher gross margins also.
The acquisition of connect engineering looks fantastic IMO. Essentially paid $2.27m when you exclude cash from acquired company & would have seen a NPAT of $2.5m, that's over a 100% ROI!!! The sector trades on or about 5-7x EBITDA. FY22 forecast EBITDA is $34-$38m. Let's pick the conservative figure of $34m EBITDA for FY22. Lets use a 6x EBITDA multiple as this is around sector median. $34m x 6x = $204m MC. 155.6m Shares out. I believe it is fairly worth $1.30/share in FY22. Based on a share price of $1.12 at close today I would expect a minimum return of 16% over the next year. If management have been conservative with the EBITDA & they outperform with the connect engineering acquisition having a full year of operations & we hit the $38m EBITDA & use the 6x multiple should give us a share price of $1.46 in FY22, IRR 30%.
GNP Price at posting:
$1.12 Sentiment: Buy Disclosure: Held
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