HASAMAX
That is the million dollar question!
I wish I had the answer but I don't. The company will never disclose it. If we assume that the developer rebates half of his $600,000 profit on the development of a child care centre that cost $2m then we could argue the rebate could come in the form of a rent free period of three to four years (four if you NPV the value of the money upfront). Rent on the centres is generally about 11% of revenues and given Eddie quoted the average revenue per centre at $787,500 we could argue that this would give them a free kick of around $86,000 which would inflate the EBITDA per centre by around 50%. Obviously, that makes a big difference. Again, I am just giving an example because i don't know to what extent it is happening. I'll let you work out what P/E it is trading on if this scenario is correct. I would assume a healthy P/E de-rating if the market confirmed this was the case as well in which case the stock would fall greater than 50%.
Hopefully for all the holders out there I hope I am wrong, but I like to approach stories that seem too good to be true with a bit of skepticism and in this case i think i have found some evidence to back up my concerns.
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a.b.c. learning centres limited
abc learning interim net profit up 62 percent, page-35
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