News: ASH Ashley Services Group Acquires Owen Pacific Workforce, page-6

If ASH can sustain at least $4m p.a. EBITDA from this acquisition (which is the low end of the forecast 2023 range) then we should see a major rerate from OPW. I've updated the forecasts below for the acquisition which includes 6 months contribution in 2023. This indicates that ASH could hit $1 and still have a P/E of less than 10x for fiscal 2023. We are also likely to see continued healthy dividend growth with 7.3c for fiscal 23 (I've revised my dividend payout assumptions from 75% to 70% to allow additional debt paydown). That said, I don't know much about offshore labour hire arrangements and how sustainable they are when labour market pressure ease and/or migration increases. I would have also liked to see the existing owners keep some skin in the game and the earnouts appear fairly fixed. Nonetheless, at 79c, ASH is cheap even if the acquisition performance is weaker than expected. Looking forward to seeing the H1 results and dividend.