I think 12x is fair. While drilling income is obviously still...

I think 12x is fair.

While drilling income is obviously still the primary earnings source, VYS are demonstrating their drilling business is of higher ilk than others with it solely linked to production based waterwell drilling - delivering strong and consistent earnings. And as the fleet pushes towards nearly all rigs being dual rotary + uplift in double shifting, I think it deserves a premium to the traditional 8x multiple for a traditional drilling biz.

Parking drilling aside, the aquifer recharge and consulting business are low capex and scalable so as they get bigger, they can probably attract a 15x-20x multiple. You only have to look at their global peers (i.e. Tetra Tech) and what sort of multiple they trade at. Even the aquifer testing/ injection testing biz doesn't need much maintenance capex and they have strong technical IP so you could group that business in this group.

And then there's the potential upside of the asset management business. Which is really a combination of water ownership + funds management. That sort of business can trade much higher than the traditional businesses. And gives the business upside that we don't see in other industrials IMO.

And let's not forget the free hit with the concept JV or management's track record of delivering excellent growth drivers without diluting. It's going to be a very interesting 12 months.