Hey All, I've recently taken a position in SEQ. The business appears very cheap & the downside risk seems fairly low. As of June 21 the business had $34m in cash & $300k debt so $33.7m net cash / $0.25c cash per share. At today's price I'm getting the business for around $57m. FY21 produced approx. $5.6m FCF & I'm expecting this to grow into FY22. Based on the LTM FCF the business is trades at only 10x FCF & offers a mouth watering 9.8% FCF yield. During the AGM Garry had mentioned the business earns roughly $800k-$1m per month in cash. Garry also mentioned they are to use this cash for acquisitions at 5-7x earnings. Let's assume no acquisitions are made during FY22 & cash builds up at $800k per month to June 22. We are now sitting on around $43m cash / $0.32c per share taking our enterprise value to $46m & lets be conservative & say the business earns $5m in FCF again this would now trade at 9x FCF & offer a 11% FCF yield. The $46m also means I'm paying just 7.6x EBITDA for the Wealth segment alone & the rest of the business is free.
Anyone have any thoughts on my take?
SEQ Price at posting:
67.0¢ Sentiment: Buy Disclosure: Held
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