WAM Microcap were owners up until a couple of months ago, I...

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fitfunfusion

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10/11/20

19:29

Post #: 48777698
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Originally posted by saintex: ↑

Like some other people on the forum, I got bored by this stock and decided to sell. But I kept it on my watch list because it was cheap and had a rather steady business.
Today, I decided to buy again, as this acquisition of Multipack-LJM is a significant step for them.
Looking at PBP last annual results, this acquisition will increase their size by 70 % and their EBITDA by 75 %.
They will do it via a limited increase in their number of shares (by a maximum of 15 %).
So most of the acquisition will be financed by debt. The ratio net debt/EBITDA is expected to increase from 0.4 to 1.4 x.
After acquisition, their debt will be 41.7 m to compare with a free cash flow of 8.2 m last year for Probiotec alone and so a combined free cash flow which should be much higher after acquisition. PBP mentions that Multipack has a "high return on capital, with a strong cash flow generation".

The main point of this acquisition : it will be earning accretive by 40 % based on FY 20 results, excluding the impact of potential deferred consideration. No need to say that it is massive and it is explained by the fact that PBP pays this company on an EV/EBITDA of 4.2 x vs its onw valuation of an EV/EBITDA of 7.9 x.
This earning impact estimate does not include any synergies.

As someone else indicated on the forum today, the stock was already cheap before this acquisition.
So, it looks even more interesting now.
The significant increase of its size could also create more interest among fund managers.
Not sure if they are still holders, but they were quite interesting fund managers as holders (WAM, Paradice...).

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WAM Microcap were owners up until a couple of months ago, I think they're still owners it's just not showing in their top 20 holdings.
This was always a value share flying under the radar, and now it's great value.

Last edited by fitfunfusion: 10/11/20

PBP Price at posting: $2.00 Sentiment: Buy Disclosure: Held
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WAM Microcap were owners up until a couple of months ago, I...

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