The guidance (re-affirmed) of 20% EBITDA growth will take the business to $96m EBITDA for FY2024 and, assuming D&A of $36m, cf to JH2023's annualised $34m, EBIT of $60m.
Which, based on SRG's Enterprise Value of around $390m [Mkt Cap of $345m,Net Debt of $17m and Lease liabilities (to be conservative) of $26m], is an
EV/EBITDA of 4.0x and
EV/EBIT of 6.0x.Unambiguously cheap, even for a gnarly business such as this.
One thing to watch closely is how the
corebusiness is travelling (i.e., stripping out the acquired growth, in this case the $80m purchase in February this year of ALS's Asset Care business).
My estimates [see table below] strip out the expected debut full-year EBITDA contribution in FY2024 from Asset Care ($16m based on the 5x EBITDA acquisition metrics), which means that the Core SRG business will be making EBITDA of around $80m.
This would be an increase of
7% on FY2023's Core EBITDA of $75m (FY2023 Group EBITDA was $80.1m and I estimate Asset Care would have made around $5.0m EBITDA for the 4 months it was owned by SRG).
View attachment 5657579(Note that the company had a bumper JH2023, with Core coming in a touch above $41m, based on my admittedly crude analysis. So the naysayers could say that, annualised that's $82m, which is more than my $80m implied figure for FY2024, so it means that Core earnings are going backwards.
But I think that would be a harsh position to adopt because JH2023 was quite an exceptional result, with GP Margin hitting 58.6% (prior halves: DH22 = 51.8%, JH22 = 51.1% and DH2021 = 54.5%) and I'm not sure that ~59% is a level that is able to be sustained.)
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(20min delay)