Ann: Trading Halt, page-44

Thanks for sharing, it is nice to see Redleaf covering. I think FND is well below where it should be but have several issues with Refleaf valuation:

1) It seems like they are valuing TSI, not FND's share in TSI (a tad over 80%)
2) Share count will rise with option exercise. If price goes below exercise price and options become worthless you would think many players would have interest in getting 10% stake to block a takeover/under (e.g. competitors for takeover/big investors for under), so think SOI should be above 50 mil and assume full dilution.
3) Risk weighting is excessive Parimal just gave a valuation and are invested on basis of IPO. Maybe this is explained in the report but it's a valuation technique I've not seen.
4) I know Parimal used EV/EBITDA but don't understand why this is applied. TSI is an ATM business and machines depreciate. EV/EBITDA is great for mines, but not for FND/TSI that is more like a REIT. I know it is what FND use in presos and Parimal used for valuation, but the logic isn't really clear.

I recognise some of this feedback is a bit harsh, but I strongly think this sort of valuation is unnecessary. Based on the Parimal transaction, they have valued FND’s stake of the TSI business at $183 million or roughly $3.12 per share, and put $37.6 million at risk based on this valuation which you would think as a minimum given they would expect to be coming out ahead at IPO (max 3 years from now). As a small ASX investor, this seems like a no brainer to me given what Parimal paid.

HY results due soon and hopefully WL ann before XMAS should give SP a boost.