A few points on this:
In the Nov 16 announcement, the 8 month underlying EBITDA of $41M, or $66M extrapolated to annual, is effectively a $34M annual miss.
They're actually expecting $60m, not $66m, according to the AGM. The miss is large.
The NEXTGEN assets cost over $1B to build over more than a decade. VOC bought it for $700M, most of this with equity at around $7.55 per share.
Very good point and often overlooked. One would wonder if management knew the equity was more than fairly priced, hence using it to fund the acquisition (M2 history suggests as much)
So, if VOC can get NEXTGEN operating well again by the end of FY18, the $100M starting EBITDA would have an additional $27M added during FY19 plus any capital and revenue synergies, plus new earnings from the NWCS and any other organic growth before then.
I'm not sure if this is a little too optimistic... but I failed to foresee that sort of EBITDA decrease, so I guess the inverse is possible.
Growth capex opportunity is a good thing for shareholders as it promises increasing returns in the future.
Only if the return on this incremental capex exceeds the cost of capital. History would suggest as much, but given the state of the books its very hard to accurately gauge this.
* $31.5M from increased synergies (note, the figures in the presentation are end of FY run rates, so I have calculated an average for two FYs and taken the difference).
* $15M from fixing the one-off, temporary operational issues.
* $22M from organic growth (I have assumed revenue growth of 4% plus improving margins leading to organic growth of 5%).
These are a little too optimistic for me. The organic growth is OK, but where is the margin expansion coming from?
Synergies are OK if they hit them, but probably conservative to factor in a little less than quoted.
* At $4.10, VOC is at a 33% discount to book value.
As mentioned by others, this doesn't really matter... Remember, at the time it was one overpriced company merging with another. So whilst only shares were used to pay for the merger, the goodwill is not representative of fair value (in my view).
EPS growth should easily continue at > 10% p.a. for several years to come.
I actually agree with this statement, but will depend strongly on the incremental returns from additional capex.
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