acquisition of peo, page-2

owenaoz, what do you think? I'm assuming your not investing in a company without knowing the implications?

Anyway, my thoughts are:
1. Earnings accretitive immediately, thus rise in AMM share price.
2. EBITDA annual increase of $2m - Based on a share price of 20cents, this puts the PE to circa 14 on my analysis, which is probably conservative. eg: not factoring into IIN's contingent profit of $9m due to TLS issues.. I think PE should be say, 16, thus putting the share price on 22 cents. Again i think this is conservative as based on First Half Results the PE was 19. If we adopt that PE the share price should be 27cents.

Although another way to approach it is the following: EBITDA of $2m. Apply PWT multiple to EBITDA of 7.9, say 8.0, we have a value of this acquisition of $16m. Takeaway $6m purchase price, nets $10m. Divide by number of shares and its worth 2cents, thus share price of 22 cents.

I think this is where it should lie, though perhaps higher if it opens up growth opportunities and revenue increases which it probably does.

So, my prediction for COB tomorrow is share price of 22 cents. See what happens.