2021 Profit $3m - P/E 2.4, page-2

Capital3157 we are in complete alignment. FY21 is going to be a record year for EGL both in terms of revenue and profitability.

My less than robust analysis also points to NPAT in the range $3m -$5m with a mid point of $3.8m-$4m or 1.8 -1.9c ( before the impact of the current capital raising).

I am also a fan of the significant tax losses available to EGL. In a practical sense this means that PBT=NPAT and thus the value accruing to shareholders in FY21 should be viewed as a multiple of the PBT result. This gives a real buffer to EGL's performance in FY21 if shareholder returns are viewed at the PBT line.

As I noted in my earlier post, with an engaged Board, component management and an effective IR program, EGL should trade on a P/E in the range 8X ( boring industrial) to 16X ( decent growth prospects).

This gives rise to an implied share price in the range of 14-30 cents. Let's not get carried away and set a price target at the lower end of the range, say, 15 cents.

What this whole exercise does is produce a robust objective KPI by which to evaluate the performance of EGL's Board and management. At the end of the day everything is distilled down to the share price. It is by this measure that the EGL Board and management should be evaluated. And now we have an objective robust framework to do just that.

I must say I was very surprised that yesterday's announcement of a capital raising did not include a comprehensive investor presentation detailing the encouraging prospects for FY21 and a robust source and application of funds statement to address the pivotal question of " Why raise new capital now ??" I expect there will be a comprehensive investor presentation before the Rights Issue ex date so shareholders can make an informed decision in relation to their rights.

IMO
DYOR

Clare