ama acquisition, page-2

Hard not to be bullish about latest purchase

Tim Boreham
The Australian
October 23, 2013 12:00AM


AMA 34.5c (trading halt) chief Ray Malone can't mask his zeal about a deal, to be unveiled today, that buttresses the auto accessories mob's share of the bull bar market.

"This is a belter," he says. "If this involved 100 per cent of my money I would have bought it in a heartbeat." AMA is paying $4.9 million for the Queensland-based, privately owned Custom Alloy, maker of alloy bull bars for mid-sized commercial vehicles.

AMA's East Coast Bullbars accounts for 35 per cent of this market, while Custom Alloy adds another 15 per cent. The purchase also moves AMA's share of the total "frontal protection" market to 20-22 per cent, behind the 34 per cent enjoyed by fallen angel ARB, which issued a subdued outlook statement last week.

Overall, the auto sector has been buffeted by the mining industry downturn and the abandoned FBT changes (see below). "But things seem to be returning to normal," Malone says.

He says the deal, which was five years in the offing, was struck on an earnings multiple of a stingy 3.4 times 2012-13 EBIT. East Coast Bullbars operates just down the road.

The purchase is another milestone in the redemption tale of AMA, which was in the hands of bankers in July 2009, but under revived management paid a dividend just over two years later.

Malone plans to double AMA's revenues ($65m last year) and has targeted other purchases. But he won't be rushed: "We want to eat our elephant one bit at a time."

AMA also owns the panel-beater Mr Gloss, Perth Brake Parts, Fluidrive, Allanco (auto electrics) and KT Cables.

We had AMA as a long-term buy at 29.5c in May and retain the call -- providing the shares don't go too sick today. Malone yesterday spoke at the fourth annual Australian Microcap Investment Conference, which has a habit of hosting winners.

Payments intermediary Emerchants has rocketed 650 per cent since presenting last year. Other dazzlers have been biotech hero Bionomics (up 128 per cent), Telstra and Apple store operator Vita Group (103 per cent), truck-tray maker MaxiTrans (70 per cent) and online lottery reseller Jumbo Interactive (60 per cent).


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