Management seem to be prepping the market for an eventual loss...

First 13 Last

Share
Profile

Follow
WangChung

18,269 Posts.

253

03/11/21

18:53

Post #: 57293795
Share

Originally posted by madamswer ↑

Strangely muted market response to this announcement yesterday, I thought.

For mine, the acquisition has plenty of merit, on several fronts:

1. At an EV/EBITDA acquisition multiple of ~4x, it is clearly value-accretive

2. It is also earnings quality-enhancing, with EBITDA margins of ~14%/15%, cf. NTD's current 10%

3. The obvious cost synergies from eliminating duplicated fixed cost overheads - for this scale and type of acquisition, there's normally at least $1m up for grabs (mostly duplicated corporate overheads);

4. Revenue synergies - I don't sense there is that much geographical overlap, so this is not really a "buy- out-the-opposition-to-reduce-pricing-competition" type of transaction, but there is some scope for Black Rubber products and/or services to be run through NTD's distribution network

5. The re-treading component of Black Rubber's business has some sustainability cachet - which must be worth at least half, or three-quarters, of a valuation point re-rating.

6. The most important attribute of this acquisition, though, is that it takes a reasonably meaningful step away from the customer concentration represented by the Goodyear relationship.

More smart deals like these over the foreseeable future will render the Goodyear issue somewhat moot.
(As it is I think the odds of Goodyear simply continuing to use NTD to distribute Goodyear products in Australia are better than 50% - why would Goodyear risk foregoing meaningful sales volumes by trying to save on a few % of distribution margin paid to the country's largest independent distributor?)

Expand

Management seem to be prepping the market for an eventual loss of the Cooper business (albeit, still a fair way off). Maybe they are just being ultra conservative...ie. assume the worst, and then nobody will be shocked if we lose the Coopers business, whilst nicely setting up for a rerate if we actually end up retaining it.

Last edited by WangChung: 03/11/21

NTD Price at posting: $1.29 Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

Reply

Top Stories

I88

Infini soars 50% as company reveals it could’ve just made uranium history – redefining what it means to be “high grade”

TLX

Telix jumps 11.6% as US government indicates proposed medicare changes won't affect prostate cancer drug

AUG

Augustus sees imperial share rise on high-grade Cu and gold results at Ti-Tree

RNU

Renascor wins a funding boost given it wants to produce a critical mineral – but $5M award pales in comparison to some

TX3

Canadian fieldwork yields multiple pegmatites for Trinex

There are more pages in this discussion • 2 more messages in this thread...

First 13 Last

Add NTD (ASX) to my watchlist

(20min delay)
Last 42.0¢		Change 0.000(0.00%)		Mkt cap ! $56.33M

Open	High	Low	Value	Volume
0.0¢	0.0¢	0.0¢	$0	0

Buyers (Bids)

No.	Vol.	Price($)
1	9690	40.5¢

Sellers (Offers)

Price($)	Vol.	No.
42.0¢	18704	2

View Market Depth

No.	Vol.	Price($)
1	9690	0.405
2	52748	0.400
1	2015	0.390
2	30349	0.385
2	58790	0.380

Price($)	Vol.	No.
0.420	18704	2
0.430	40409	2
0.450	15000	1
0.455	45210	1
0.460	16000	1

Last trade - 11.00am 11/07/2024 (20 minute delay)

NTD (ASX) Chart

Day chart unavailable

Management seem to be prepping the market for an eventual loss...

Infini soars 50% as company reveals it could’ve just made uranium history – redefining what it means to be “high grade”

Telix jumps 11.6% as US government indicates proposed medicare changes won't affect prostate cancer drug

Augustus sees imperial share rise on high-grade Cu and gold results at Ti-Tree

Renascor wins a funding boost given it wants to produce a critical mineral – but $5M award pales in comparison to some

Canadian fieldwork yields multiple pegmatites for Trinex

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Management seem to be prepping the market for an eventual loss...

Top Stories

Infini soars 50% as company reveals it could’ve just made uranium history – redefining what it means to be “high grade”

Telix jumps 11.6% as US government indicates proposed medicare changes won't affect prostate cancer drug

Augustus sees imperial share rise on high-grade Cu and gold results at Ti-Tree

Renascor wins a funding boost given it wants to produce a critical mineral – but $5M award pales in comparison to some

Canadian fieldwork yields multiple pegmatites for Trinex

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News